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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.
FORM S-1
POST-EFFECTIVE AMENDMENT NUMBER 16 TO
REGISTRATION STATEMENT NO. 2-95577
IDS FLEXIBLE SAVINGS CERTIFICATE
UNDER
THE SECURITIES ACT OF 1933
IDS CERTIFICATE COMPANY
(Exact name of registrant as specified in charter)
DELAWARE
(State or other jurisdiction of incorporation or organization)
6725
(Primary Standard Industrial Classification Code Number)
41-6009975
(I.R.S. Employer Identification No.)
IDS Tower 10, Minneapolis, MN 55440-0010, (612) 671-3131
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
Bruce A. Kohn, IDS Tower 10, Minneapolis, MN 55440-0010
(612) 671-2221
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
The Registrant has registered an indefinite number or amount of
securities under the Securities Act of 1933 pursuant to Section
24f-2 of the Investment Company Act of 1940. Registrants' Rule
24f-2 Notices for its most recent fiscal year (December 31) will be
filed on or about February 28, 1996.
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Explanatory Note
The first prospectus contained in Part I of the Registration
Statement will be used, with minor variations, in connection with
the following Registration Statements No. 2-68296, No. 2-76193, No.
33-3562 and No.33-22503. In each case, the first several pages of
the prospectuses vary to describe the unique attributes of each
certificate. The balance of the prospectus is almost identical for
all certificates.
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PART I. CROSS REFERENCE SHEET FOR PROSPECTUS
PURSUANT TO RULE 404(c)
IDS FLEXIBLE SAVINGS CERTIFICATE
AND VARIATIONS
Item Caption in
Number Prospectus
Item 1. Forepart of the
Registration Statement
and Outside Front Cover
Page of Prospectus.
Item 2. Inside Front and Where to get information about
Outside Back Cover Pages IDSC; Table of Contents.
of Prospectus.
Item 3. Summary Informa- About the certificate
tion, Risk Factors
and Ratio of Earnings
to Fixed Charges.
Item 4. Use of Proceeds. How your money is used and
protected; Investment policies
Item 5. Determination of Not Applicable.
Offering Price.
Item 6. Dilution. Not Applicable.
Item 7. Selling Security Not Applicable.
Holders.
Item 8. Plan of How your certificate
Distribution. is managed.
Item 9. Description of About the Certificate;
Securities to Be How to invest and withdraw
Registered. funds;
Taxes on your earnings.
Item 10. Interests of Not Applicable.
Named Experts and Counsel.
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PART I. CROSS REFERENCE SHEET FOR PROSPECTUS
PURSUANT TO RULE 404(c) (Continued)
Item Caption in
Number Prospectus
Item 11. Information with Invested and guaranteed by
Respect to the Registrant. IDSC; Regulated by government;
Relationship between IDSC and
American Express Financial
Corporation; Capital structure and
certificates issued; Directors
and Officers.
Item 12. Disclosure of Directors and Officers;
Commission Position on Also see Item 17 in
Indemnification for Part II.
Securities Act Liabilities.
<PAGE>
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IDS Flexible Savings Certificate
Prospectus - April 24, 1996
Earn guaranteed competitive rates for the term you choose.
IDS Flexible Savings Certificates are issued by IDS Certificate
Company (IDSC). You may purchase this certificate by selecting a
term of 6, 12, 18, 24, 30 or 36 months and an initial investment of
at least $1,000 but not more than $1 million (unless you receive
prior authorization to invest more). Your principal and interest
is guaranteed by IDSC. IDSC guarantees a fixed rate of interest
depending upon the term you select. You may make additional
investments during the term subject to certain limitations. You
may invest in successive terms up to a total of 20 years from the
issue date of the certificate. Your interest rate will be
determined as described in "About the certificate."
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION, NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
This certificate is backed by IDSC's investments on deposit rather
than guaranteed or insured by the government or someone else. See
"Invested and guaranteed by IDSC" and "Regulated by government"
under "How your money is used and protected."
This prospectus describes terms and conditions of your IDS Flexible
Savings Certificate. It contains facts that can help you decide if
the certificate is the right investment for you. Read the
prospectus before you invest and keep it for future reference. No
one has the authority to change the terms and conditions of the IDS
Flexible Savings Certificate as described in the prospectus, or to
bind IDSC by any statement not in it.
IDS Certificate Company
IDS Tower 10
Minneapolis, MN 55440-0010
1-800-437-3133 (toll free) or
(612) 671-3800 (Minneapolis/St. Paul area)
TTY numbers:
1-800-846-4293 (toll free) or
(612) 671-1630 (Minneapolis/St. Paul area)
An American Express company
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Where to get information about IDSC
IDSC is subject to the reporting requirements of the Securities
Exchange Act of 1934. Reports and other information on IDSC are
filed with the Securities and Exchange Commission (SEC). Copies
can be obtained from the Public Reference Section of the SEC, 450
5th St., N.W., Washington, D.C. 20549, at prescribed rates. Or you
can inspect and copy information in person at the SEC's Public
Reference Section and at the following regional offices.
Northeast Regional Office
7 World Trade Center, Suite 1300
New York, NY 10048
Midwest Regional Office
Northwestern Atrium Center
500 West Madison Street
Suite 1400
Chicago, IL 60611
Pacific Regional Office
5670 Wilshire Boulevard, 11th Floor
Los Angeles, CA 90036
Initial interest rates
IDSC guarantees a fixed rate of interest for each term. For the
initial term, the rate will be within a specified range of certain
average certificates of deposit interest rates, as published in the
most recent BANK RATE MONITOR Top 25 Market AverageTM, North Palm
Beach, FL 33408, as explained under "About the certificate."
Here are the interest rates in effect on the date of this
prospectus, April 24, 1996:
Simple Effective
interest annualized
Term rate* yield**
6-month
12-month
18-month
24-month
30-month
36-month
*These are the rates for investments under $100,000. Rates may
depend on the factors described in "Rates for new purchases" under
"Promotions and pricing flexibility" under "About the certificate."
**Assuming monthly compounding.
These rates may or may not be in effect when you apply to purchase
your certificate. Rates for future terms are set at the discretion
of IDSC and may also differ from the rates shown here.
We reserve the right to issue other securities with different
terms.<PAGE>
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Contents
Table of contents
About the certificate
Investment amounts and terms p
Face amount and principal p
Value at maturity p
Receiving cash during the term p
Interest p
Rates for new purchases p
Promotions and pricing flexibility p
Additional Investments p
How to invest and withdraw funds
Buying your certificate p
Full and partial withdrawals p
When your certificate term ends p
Transfers to other accounts p
Retirement plans: special policies p
Withdrawal at Death p
Transfer of ownership p
For more information p
Taxes on your earnings
Retirement accounts p
Gifts to minors p
Foreign investors p
How your money is used and protected
Invested and guaranteed by IDSC p
Regulated by government p
Backed by our investments p
Investment policies p
How your money is managed
Relationship between IDSC and American
Express Financial Corporation p
Capital structure and certificates issued p
Investment management and services p
Distribution p
Employment of other American Express affiliates p
Directors and officers p
Auditors p
Financial information
Summary of selected financial information p
Management's discussion and analysis of
financial condition and results of operations p
Report of independent auditors p
Financial statements p
Notes to financial statements p
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About the certificate
Investment amounts and terms
You may purchase the IDS Flexible Savings Certificate with a single
payment of at least $1,000 payable in U.S. currency. Unless you
receive prior authorization, your total amount paid in over the
life of the certificate, less withdrawals, cannot exceed $1
million.
After determining the amount you wish to invest, you select a term
of 6, 12, 18, 24, 30 or 36 months for which IDSC will guarantee an
interest rate. Generally, you will be able to select any of the
terms offered. But if your certificate is nearing its 20-year
maturity, you will not be allowed to select a term that would carry
the certificate past its maturity date.
The certificate may be used as an investment for your Individual
Retirement Account (IRA), 401(k) plan account or other qualified
retirement plan account. If so used, the amount of your
contribution (investment) will be subject to any limitations of the
plan and applicable federal law.
Face amount and principal
The face amount of the certificate is the amount of your initial
investment, and will remain the same over the life of the
certificate. Any investment or withdrawal within 15 days of the
end of a term will be added on or deducted to determine principal
for the new term. The principal is the amount that is reinvested
at the beginning of each subsequent term, and is calculated as
follows:
Principal equals Face amount (initial investment)
plus At the end of a term, interest credited
to your account during the term
minus Any interest paid to you in cash
plus Any additional investments to your
certificate
minus Any withdrawals, fees and applicable
penalties.
Principal may change during a term as described in "Add-on feature"
and "Full and partial withdrawals."
For example: Assume your initial investment (face amount) of
$5,000 has earned $75 of interest during the term. You have not
taken any interest as cash, or made any withdrawals. You have
invested an additional $2,500 prior to the beginning of the next
term. Your principal for the next term will equal:
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$5,000.00 Face Amount (initial investment)
plus $75.00 Interest credited to your account
minus ($0.00) Interest paid to you in cash
plus $2,500.00 Additional investment to your certificate
minus ($0.00) Withdrawals and applicable penalties
or fees
$7,575.00 Principal at the beginning of the next
term.
Value at maturity
You may continue to invest for successive terms for up to a total
of 20 years. Your certificate matures at 20 years from its issue
date. At maturity, the value of your certificate will be the total
of your purchase price, plus additional investments and any
credited interest not paid to you in cash, less any withdrawals and
penalties. Some fees may apply as described in "How to invest and
withdraw funds."
Receiving cash during the term
If you need your money before your certificate term ends, you may
withdraw part or all of its value at any time, less any penalties
that apply. Procedures for withdrawing money, as well as
conditions under which penalties apply, are described in "Full and
partial withdrawals" under "How to invest and withdraw funds."
Interest
Your investments earn interest from the date they are credited to
your account. Interest is compounded and credited at the end of
each certificate month (on the monthly anniversary of the issue
date).
IDSC declares and guarantees a fixed rate of interest for each term
during the life of your certificate. We calculate the amount of
interest you earn each certificate month by:
o applying the interest rate then in effect to your balance
each day
o adding these daily amounts to get a monthly total
o subtracting interest accrued on any amount you withdraw
during the certificate month.
Interest is calculated on a 30-day month and 360-day year basis.
Rates for new purchases
When your application is accepted and we have received your initial
investment, we will send you a confirmation of your purchase
showing the rate that your investment will earn. IDSC guarantees
that when rates for new purchases take effect, the rates will be
within a range based on the average interest rates then published
in the BANK RATE MONITOR Top 25 Market AverageTM (the BRM Average).
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In the case of the 6-, 12-, 24-, and 30-month terms IDSC guarantees
that, for purchases of certificates for less than $100,000, your
rate for your initial term will be 10 basis points (.10%) below to
90 basis points (.90%) above such rates for comparable length
certificates of deposit (CDs). In the case of these terms, for
purchases of certificates for $100,000 or more, IDSC guarantees
that your rate for your initial term will be within a range of 5-
105 basis points above such rates for comparable length
certificates of deposit.
In the case of the 18-month term, because the BRM Average doesn't
typically publish rates for comparable length certificates of
deposit, IDSC guarantees that, for purchases of certificates for
less than $100,000, the rate for your initial term will be within a
range of 0-100 basis points above the rates for the 12-month
certificates of deposit. In the case of the 18-month term, for
purchases of certificates of $100,000 or more, IDSC guarantees that
your rate for your initial term will be within a range of 15-115
basis points above the rates for the 12-month certificates of
deposit.
In the case of the 36-month term, because the BRM Average doesn't
typically publish rates for comparable length certificates of
deposit, IDSC guarantees that, for purchases of certificates for
less than $100,000, the rate for your initial term will be within
0-100 basis points above the rates for the 30-month certificate of
deposit. In the case of the 36-month term, for purchases of
certificates of $100,000 or more, IDSC guarantees that your rate
for your initial term will be within 15-115 basis points above the
rates for the 30-month certificates of deposit. For example, if
the rate most recently published in the BRM Average with respect to
the 30-month certificate of deposit is 6.00% our rates in effect
for that week for 36-month terms would be between 6.00% and 7.00%
for purchases for less than $100,000.
However, IDSC guarantees that, for persons who have received a
special promotional coupon from IDSC for purchase of a Flexible
Savings Certificate with an initial term of 6, 12, 24 or 30 months
and have satisfied the conditions in the coupon, when rates for new
purchases take effect, the rate for the initial term will be within
a range from 100 basis points (1%) to 200 basis points above the
average interest rate published for comparable length CDs in the
BRM Average. Similarly, IDSC guarantees that, for persons who have
received a special promotional coupon from IDSC for purchase of a
Flexible Savings Certificate with an initial term of 18 or 36
months and have satisfied the conditions in the coupon, when rates
for new purchases take effect, the rate for an initial term of 18
or 36 months will be within a range from 100 basis points (1%) to
200 basis points above the average interest rate published for 12-
month CDs or 30-month CDs, respectively, in the BRM Average. For
example, the coupon may require that you make a minimum investment
and that you are not an existing client of American Express
Financial Corporation (AEFC), American Express Financial Advisors
Inc., or another subsidiary of AEFC. AEFC will select persons to
receive the coupon based on a business strategy to build
relationships with new clients in selected market segments who AEFC
believes meet threshold requirements for such factors as household
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PAGE 11
income and home values. From time to time coupons may be sent only
to persons who both fit this strategy and live in particular parts
of the country or are affiliated with particular organizations such
as an automobile club.
From time to time, for your initial term, IDSC may offer
certificates with different terms than those described above. Such
terms may be from 7-47 months. For these terms, IDSC guarantees
that, for purchases of certificates for less than $100,000, your
rate for your initial term will be within a range of 50-150 basis
points above the rates published in the BRM Average for the
certificates of deposit specified above that have the maturity that
is closest to the term of the IDS certificate in question. If two
different BRM Averages have the closest maturities, we will use the
longest maturity that is shorter than the term of the IDS
certificate in question. For purchases of certificates of $100,000
or more, the range for your initial term will be 65 -165 points
above the same rate. For example, in the case of a 7-month term,
IDSC guarantees that, for purchases of certificates less than
$100,000, your rate for your initial term will be within a range of
50-150 basis points above the rates for the 6-month certificates of
deposit, and for purchases of certificates for $100,000 or more,
your rate for your initial term will be within a range of 65-165
basis points above the rates for the 6-month certificates of
deposit. Purchase of a certificate in one of these special offers
may result in a later term of less than 6 months in order to permit
your certificate to mature 20 years from its issue date. IDSC may
limit the offering of these certificates to persons with
characteristics like those described above for special promotional
coupons or to circumstances like those described under "Promotions
and pricing flexibility."
The BANK RATE MONITOR is a weekly magazine published in North Palm
Beach, FL 33408 by Advertising News Service Inc., an independent
national news organization that collects and disseminates
information about bank products and interest rates. Advertising
News Service Inc. has no connection with IDSC, AEFC, or any of
their affiliates.
The BRM Average is an index of rates and annual effective yields
offered on various length certificates of deposit by large banks
and thrifts in 25 metropolitan areas. The frequency of compounding
varies among the banks and thrifts. Certificates of deposit in the
BRM Average are government insured fixed-rate time deposits.
The BANK RATE MONITOR is available in your local library. To
obtain information on current BRM Average rates, call the Client
Service Organization at the telephone numbers listed on the back
cover between 8 a.m. and 6 p.m. your local time.
Rates for new purchases are reviewed and may change weekly.
Normally, the rate you receive will be the higher of:
o the rate in effect for your chosen term on the date of
your application
o the rate in effect on the date your application is
accepted by IDSC.
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PAGE 12
However, if your application bears a date more than seven days
before its receipt by IDSC, the rate you receive will be the higher
of:
o the rate in effect on the date your application is
accepted by IDSC
o the rate in effect seven days before receipt.
Except for specific promotions, IDSC guarantees an initial rate 25
basis points above the rate offered to the general public on this
IDSC certificate if it is purchased by using the CD transfer
service offered by American Express Financial Advisors, Inc. to
help you transfer money from a bank or thrift CD account into IDSC
investments. To be eligible for this rate, you must transfer at
least $10,000 from a CD account to IDSC to purchase one or more IDS
Cash Reserve Certificates and/or IDS Flexible Saving Certificates,
and this rate will only apply to those certificates.
Except for specific promotions, IDSC guarantees active or retired
AEFC employees, IDSC's directors, American Express financial
advisors, their immediate families and any U.S. employee of any
affiliated company of IDSC an initial rate 75 basis points above
the rate offered to the general public, reflecting the lower
distribution costs associated with such sales.
Promotions and pricing flexibility
From time to time, IDSC may sponsor or participate in promotions
involving one or more of the certificates and their respective
terms. For example, we may offer different rates to new clients,
to existing clients, or to individuals who have purchased other
products or used other services of AEFC or its subsidiaries.
We also may offer different rates based on your amount invested,
geographic location and whether the certificate is purchased for an
IRA or a qualified retirement account.
These promotions will generally be for a specified period of time.
If we offer a promotion, the rates for new purchases will be within
the range of rates described under "Rates for new purchases".
Rates for future terms: Interest on your certificate for future
terms may be greater or less than the rates you receive during your
first term. In setting future interest rates, a primary
consideration will be the prevailing investment climate, including
certificate of deposit yields as reflected in the BRM Average.
Nevertheless, we have complete discretion as to what interest rate
shall be declared beyond the initial term. At least six days in
advance of each term, we will send you notice of the rate that your
certificate will earn for that term. If the BRM Average is no
longer publicly available or feasible to use, IDSC may use another,
similar index as a guide for setting rates.
Performance: From February 1990 through February 1995, IDS
Flexible Savings Certificate one year yields were higher than
average bank and thrift one year certificate of deposit yields and <PAGE>
PAGE 13
Super NOW accounts, as measured by the BRM Average (prior to Jan.
13, 1993, yields were measured by the BRM National IndexTM, an
average of CD yields in 10 cities).
Yields from February 1990 through February 1995
8%
____ IDS Flexible Savings - 1 year
.... Certificate of deposit - 1 year
6%
4% Two lines comparing the yields for one-year IDS Flexible
Savings Certificate against those of one-year certificates
of deposit with Flexible's yield generally above the CD's
2%
90 91 92 93 94 95
o The graph compares past yields and should not be considered a
prediction of future performance.
Additional investments
You may make investments within 15 calendar days after the end of a
term (the "grace period"). Investments added to your certificate
during the grace period will increase the principal balance for
purposes of the 25% add-on feature described below and the 10%
withdrawal feature described under "Full and partial withdrawals."
Additional investments may be in any amount so long as your total
investment, less withdrawals, does not exceed $1 million (unless
you receive prior authorization from IDSC to invest more). You
will earn interest on additional investments from the date we
accept them. IDSC will send a confirmation of additional
investments.
Add-on feature: You may also add to your certificate during the
term. These additional investments may not exceed 25% of the
certificate's principal balance at the end of the grace period.
This principal includes the balance at the end of the previous
term, plus or minus any deposits or withdrawals during the grace
period.
Any add-on or withdrawal during the grace period will change the
principal amount used to determine the amount available for the 25%
add-on feature.
For example, suppose your original balance is $9,000. During the
grace period, you add $1,000. At any time during the current term,
you could add up to 25% of principal ($9,000 + $1,000 = $10,000),
or $2,500 to your certificate.
The interest rate for these additional investments is the rate then
in effect for your account. If your additional investment <PAGE>
PAGE 14
increases the principal of your certificate so that your
certificate's principal has exceeded a break point for a higher
interest rate, the certificate will earn this higher interest rate
for the remainder of the term, from the date the additional
investment is accepted.
How to invest and withdraw funds
Buying your certificate
Your American Express financial advisor will help you fill out and
submit an application to open an account with us and purchase a
certificate. We will process the application at our corporate
offices in Minneapolis. When your application is accepted and we
have received your initial investment, we will send you a
confirmation of your purchase, indicating your account number and
applicable rate of interest for your first term, as described under
"Rates for new purchases." See "Purchase policies" below.
IMPORTANT: When opening an account, you must provide IDSC with
your correct Taxpayer Identification Number (Social Security or
Employer Identification Number). See "Taxes on your earnings."
Purchase policies
o Investments must be received and accepted in the Minneapolis
headquarters on a business day before 3 p.m. Central time to
be included in your account that day. Otherwise your purchase
will be processed the next business day.
o You have 15 days from the date of purchase to cancel your
investment without penalty by either writing or calling the
Client Service Organization at the address or phone number on
the back of this prospectus. If you decide to cancel your
certificate within this 15-day period, you will not earn any
interest.
o If you purchase a certificate with a personal check or other
non-guaranteed funds, AEFC will wait one day for the process
of converting your check to federal funds (e.g., monies of
member banks within the Federal Reserve Bank) before your
purchase will be accepted and you begin earning interest.
o IDSC has complete discretion to determine whether to accept an
application and sell a certificate.
A number of special policies apply to purchases, withdrawals and
exchanges within IRAs, 401(k) plans and other qualified retirement
plans. See "Retirement plans: special policies."
Two ways to make additional investments
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PAGE 15
1
By mail
Send your check along with your name and account number to:
Regular mail:
American Express Financial Advisors Inc.
Client Service Organization
IDS Tower 10
Minneapolis, MN 55440-0010
Express mail:
American Express Financial Advisors Inc.
Client Service Organization
733 Marquette Ave.
Minneapolis, MN 55440-0010
2
By wire
For investment into an established account, you may wire money to:
Norwest Bank Minneapolis
Routing No. 091000019
Minneapolis, MN
Attn: Domestic Wire Dept.
Give these instructions:
Credit IDS Account #00-30-015 for personal account # (your
account number) for (your name).
If this information is not included, the order may be rejected and
all money received, less any costs IDSC incurs, will be returned
promptly.
o Minimum amount you may wire: $1,000
o Wire orders can be accepted only on days when your bank, AEFC,
IDSC and Norwest Bank Minneapolis are open for business.
o Wire purchases are completed when wired payment is received
and we accept the purchase.
o Bank wire purchases are not sent until the next business day.
o Wire investments must be received and accepted in the
Minneapolis headquarters on a business day before 3 p.m.
Central time to be credited that day. Otherwise your purchase
will be processed the next business day.
o IDSC, AEFC and its other subsidiaries are not responsible for
any delays that occur in wiring funds, including delays in
processing by the bank.
o You must pay any fee the bank charges for wiring.
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PAGE 16
Full and partial withdrawals
You may withdraw your certificate for its full value or make a
partial withdrawal of $100 or more at any time. If you purchase
this certificate for an IRA, 401(k) or other retirement plan
account, early withdrawals or cash payments of interest taken
prematurely may be subject to IRS penalty taxes.
o If your withdrawal request is received in the Minneapolis
headquarters on a business day before 3 p.m. Central time, it
will be processed that day and payment will be sent the next
business day. Otherwise, your request will be processed one
business day later.
o Full and partial withdrawals of principal are subject to
penalties, described below.
o Interest payments in cash may be sent to you at the end of
each certificate month, quarter, or on a semiannual or annual
basis.
o If a withdrawal reduces your account value to a point where we
pay a lower interest rate, you will earn the lower rate from
the date of the withdrawal.
o You may not otherwise make a partial withdrawal if it would
reduce your certificate balance to less than $1,000. If you
request such a withdrawal, we will contact you for revised
instructions.
o Scheduled partial withdrawals may be made monthly, quarterly,
semiannually, annually and at term end.
o Withdrawals before the end of the certificate month will
result in loss of accrued interest on the amount withdrawn.
You'll get the best result by timing a withdrawal at the end
of the certificate month.
Penalties for early withdrawal during a term: When you request a
full or partial withdrawal, we pay the amount you request:
o first from interest credited during the current term
o then from the principal of your certificate.
Any additional investments or withdrawals during a term are added
to or deducted from the principal and are used in determining any
withdrawal charges.
Penalty exceptions: There is never a penalty for withdrawal of
interest. In addition, you may withdraw up to 10% of your
principal during the term without a withdrawal penalty. The
principal available for the 10% no-penalty withdrawal feature is
the balance in the certificate at the beginning of the term plus or
minus any deposits or withdrawals made during the grace period.
The 2% penalty is also waived upon death of the certificate holder,
or if it is for an IRA and you have reached age 72-1/2. See <PAGE>
PAGE 17
"Retirement plans: special policies" for additional penalty
policies.
The following example demonstrates how this feature works:
Suppose your certificate balance is $1,000. During the grace
period, you add $500, bringing the principal to $1,500. At any
time during the term, you could withdraw up to $150 of principal
with no penalty.
Any additional investments or withdrawals following the grace
period will not change the principal amount used to determine the
amount available for the 10% no-penalty withdrawal feature.
Withdrawal penalties: For withdrawals during the term of more than
the interest credited that term and over 10% of the certificate's
principal, a 2% withdrawal penalty will be deducted from the
account's remaining balance.
For example, assume you invest $20,000 in a certificate and select
a two-year term. A little over a year later assume you have earned
$1,600 in interest. The following demonstrates how the withdrawal
charge is deducted:
When you withdraw a specific amount of money, we would have to
withdraw somewhat more from your account to cover the withdrawal
charge. For instance, suppose you request a $5,000 check. The
first $1,600 paid to you is interest earned that term, the next
$2,000 is 10% of principal, and not subject to the withdrawal
penalty, and the remaining $1,400 paid to you is principal over the
10% limit. We would send you a check for $5,000 and deduct a
withdrawal charge of $28.00 ($1,400 x 2%) from the remaining
balance of your certificate account. Your new balance would be
$16,572 ($21,600 - $5,028).
Total investments $20,000.00
Interest credited $1,600.00
Total balance $21,600.00
Requested check $5,000.00
Credited interest withdrawn ($1,600.00)
10 percent of principal -- not subject to ($2,000.00)
penalty
___________
Remaining portion of requested withdrawal -- $1,400.00
subject to penalty
Withdrawal penalty percent 2.00%
Actual withdrawal penalty $28.00
Balance prior to withdrawal $21,600.00
Requested withdrawal check ($5,000.00)
Withdrawal penalty ($ 28.00)
Total balance after withdrawal $16,572.00
Additionally, if you withdraw during a certificate month, you will
not earn interest for the month on the amount withdrawn.
<PAGE>
PAGE 18
For more information on withdrawal charges, talk with your American
Express financial advisor or call the Client Service Organization
at the number on the back cover.
When your certificate term ends
Shortly before the end of the term you have selected for your
certificate, we will send you a notice indicating the interest rate
that will apply to the certificate for the new term. When your
certificate term ends we will automatically renew your certificate
for the standard term (6, 12, 18, 24, 30 or 36 month) nearest in
length to your initial term. If your initial term is equidistant
from two standard terms, we will automatically renew your
certificate to the term with the largest maturity that is shorter
than your initial term. If you wish to select a different term,
you must notify us in writing before the end of the grace period.
You will not be allowed to select a term that would carry the
certificate past its maturity date.
The interest rates that will apply to your new term will be those
in effect on the day the new term begins. We will send you a
confirmation showing the rate of interest that will apply to the
new term you have selected. This rate of interest will not be
changed during that term.
If you want to withdraw your certificate without a withdrawal
charge, you must notify us within 15 calendar days following the
end of a term. However, you will lose any interest accrued since
the end of the term.
You may also add to your investment within the 15 calendar days
following the end of your term. see "Additional investments" under
"About the certificate."
Other full and partial withdrawal policies:
o If you request a partial or full withdrawal of a certificate
recently purchased or added to by a check or money order that
is not guaranteed, we will wait for your check to clear.
Please expect a minimum of 10 days from the date of your
payment before IDSC mails a check to you. A check may be
mailed earlier if your bank provides evidence that your check
has cleared.
o If your certificate is pledged as collateral, any withdrawal
will be delayed until we get approval from the secured party.
o Any payments to you may be delayed under applicable rules,
regulations or orders of the SEC.
Transfers to other accounts
You may transfer part or all of your certificate for any other IDSC
certificate or into another existing American Express Financial
Advisors, Inc. account that has the same registered ownership
(subject to any terms and conditions that may apply).
<PAGE>
PAGE 19
Two ways to request a withdrawal or transfer
1
By phone
o Call the Client Service Organization at the telephone numbers
listed on the back cover between 8 a.m. and 6 p.m. your local
time.
o Maximum phone request: $50,000
o Transfers into an American Express Financial Advisors Inc.
account with the same ownership.
o A telephone withdrawal request will not be allowed within 30
days of a phoned-in address change.
o We will honor any telephone request believed to be authentic
and will use reasonable procedures to confirm that they are.
This includes asking identifying questions and tape recording
telephone calls. So long as reasonable procedures are
followed, neither IDSC nor AEFC or its subsidiaries will be
liable for any loss resulting from fraudulent requests.
You may request that telephone withdrawals not be authorized from
your account by writing the Client Service Organization.
2
By mail
Send your name, account number and request for a withdrawal or
transfer to:
Regular mail:
American Express Financial Advisors Inc.
Client Service Organization
IDS Tower 10
Minneapolis MN 55440-0010
Express mail:
American Express Financial Advisors Inc.
Client Service Organization
733 Marquette Avenue
Minneapolis MN 55402
Written requests are required for:
o Transactions over $50,000.
o Pension plans and custodial accounts where the minor has
reached the age at which custodianship should terminate.
o Transfers to another American Express Financial Advisors Inc.
account with different ownership (all current registered
owners must sign the request).
<PAGE>
PAGE 20
Three ways to receive payment when you withdraw funds
1
By regular or express mail
o Mailed to address on record; please allow seven days for
mailing
o Payable to name(s) you requested
o For express mail, you will pay charges that vary depending on
the courier you select. For a partial withdrawal leaving a
remaining balance of more than $1,000, these charges will be
deducted from the remaining balance. If the remaining balance
is less than $1,000, or if it is a full withdrawal, charges
are deducted from proceeds of the withdrawal.
2
By wire
o Minimum wire withdrawal: $1,000
o Request that money be wired to your bank
o Bank account must be in same ownership as IDSC account
o Pre-authorization required. Complete the bank wire
authorization section in the application or use a form
supplied by your American Express financial advisor. All
registered owners must sign.
o A service fee, if any, may be deducted from your balance (for
partial withdrawals) or from the proceeds of a full
withdrawal.
3
By electronic transfer
o Available only for preauthorized scheduled partial withdrawals
and other full or partial withdrawals
o No charge
o Deposited electronically in your bank account
o Allow two to five business days from request to deposit
Retirement plans: special policies
o If the certificate is purchased for a 401(k) plan or other
qualified retirement plan account, the terms and conditions of
the certificate apply to the plan as the owner of this
certificate. However, the terms of the plan, as interpreted
by the plan trustee or administrator, will determine how a
participant's individual account under the plan is
administered. These terms may differ from the terms of the
certificate.
<PAGE>
PAGE 21
o If your certificate is held in a Custodial Retirement Plan (or
Keogh plan), special rules may apply at maturity. If no other
investment instructions are provided directing how to handle
your certificate at maturity, the full value of the
certificate will automatically transfer to a new or existing
cash management account according to the rules outlined in the
Custodial Retirement Plan document.
o The annual custodial fee for IRA or non-401(k) qualified
retirement plans may be deducted from your certificate
account. It may reduce the amount payable at maturity or the
amount received upon an early withdrawal.
o Retirement plan withdrawals may be subject to withdrawal
penalties or loss of interest even if they are not subject to
federal tax penalties.
o We will waive withdrawal penalties on withdrawals for IRA
accounts of clients who have reached age 70 1/2.
o If you withdraw all funds from your last account in an IRA
plan at American Express Trust Company, a $25 termination fee
will apply.
o The IRA termination fee will be waived if withdrawal occurs
upon the holder's death.
Withdrawal at death
If a certificate is surrendered upon the client's death, any
applicable surrender charge will be waived. In addition, if an IRA
termination fee is applicable, it will also be waived.
Transfer of ownership
While the certificate is not negotiable, IDSC will transfer
ownership upon written notification to our Client Service
Organization. However, if you have purchased your certificate for
an IRA, 401(k) plan or other qualified retirement plan, you may be
unable to transfer or assign the certificate without losing the
account's favorable tax status. Please consult your tax advisor.
For more information
For information on purchases, withdrawals, exchanges, transfers of
ownership, proper instructions and other service questions
regarding your certificate, please consult your financial advisor
or call the Client Service Organization at the number listed on the
back cover.
Taxes on your earnings
Interest on your certificate is taxable when credited to your
account. Each calendar year we provide the certificate account
owner and the IRS with reports of all earnings over $10 (Form
1099). Withdrawals are reported to the certificate account owner
and the IRS on Form 1099-B, Proceeds from Broker Transactions.
<PAGE>
PAGE 22
Retirement accounts
If you are using the certificate as an investment for an IRA,
401(k) plan account or other qualified retirement plan account,
income tax rules for your IRA or qualified plan apply. Generally,
you will pay no income taxes on your investment's earnings--and, in
many cases, on part or all of the investment itself--until you
begin to make withdrawals.
IDSC will withhold federal income taxes of 10% on IRA withdrawals
unless you tell us not to. IDSC is required to withhold federal
income taxes of 20% on most other qualified plan distributions,
unless the distribution is directly rolled over to another
qualified plan or IRA.
Withdrawals from retirement accounts are generally subject to a
penalty tax of 10% by the IRS if you make them before age 59-1/2,
unless you are disabled or if they are made by your beneficiary in
the event of your death. (Other exceptions may apply.) Also,
withdrawals of principal during a certificate month may be subject
to the certificate's provision for loss of interest.
Consult your tax advisor to see how these rules apply to you before
you request a distribution from your plan or IRA.
Gifts to minors
The certificate may be given to a minor under either the Uniform
Gifts or Uniform Transfers to Minors Act (UGMA/UTMA), whichever
applies in your state. UGMAs/UTMAs are irrevocable. Generally,
under federal tax laws, income over $1,200 on property owned by
children under age 14 will be taxed at the parents' marginal tax
rate, while income on property owned by children 14 or older will
be taxed at the child's rate.
Your Taxpayer Identification Number (TIN) and backup withholding:
As with any financial account you open, you must list your current
and correct Taxpayer Identification Number (TIN)--either your
Social Security or Employer Identification Number. The TIN must be
certified under penalties of perjury on your application when you
open an account with IDSC.
If you don't provide the TIN to IDSC, or the TIN you report is
incorrect, you could be subject to backup withholding of 31% of
your interest earnings. You could also be subject to further
penalties, such as:
o a $50 penalty for each failure to supply your correct TIN
o a civil penalty of $500 if you make a false statement that
results in no backup withholding
o criminal penalties for falsifying information.
You could also be subject to backup withholding because you failed
to report interest on your tax return as required.
<PAGE>
PAGE 23
To help you determine the correct TIN to use on various types of
accounts, please use this chart:
How to determine the correct TIN:
Use the Social Security or
For this type of account Employer Identification Number of
Individual or joint The individual or first person
listed on the account
Custodian account of a minor The minor
(Uniform Gifts/Transfers to
Minors Act)
A living trust The grantor-trustee (the person
who puts the money into the trust)
An irrevocable trust, The legal entity (not the personal
pension trust or estate representative or trustee, unless
no legal entity is designated in
the account title)
Sole proprietorship or The owner or partnership
partnership
Corporate The corporation
Association, club or The organization
tax-exempt organization
For details on TIN requirements, ask your financial advisor or
local American Express Financial Advisors Inc. office for Federal
Form W-9, Request for Taxpayer Identification Number and
Certification.
Foreign investors
If you are not a citizen or resident of the United States, you must
supply IDSC with Form W-8, Certificate of Foreign Status when you
purchase your certificate, and you must resupply it every three
years. You must also supply a current mailing address and an
address of foreign residency, if different. IDSC will not accept
purchases of certificates by nonresident aliens without an
appropriately certified Form W-8 (or approved substitute). Also,
if you do not supply Form W-8 you will be subject to backup
withholding on interest payments and withdrawals.
Interest on the certificate is "portfolio interest" as defined in
U.S. Internal Revenue Code Section 871(h) if earned by a
nonresident alien. Even though your interest income is not taxed
by the U.S. government, it will be reported at year end to you and
to the U.S. government on a Form 1042S, Foreign Person's U.S.
Source Income Subject to Withholding. The United States
participates in various tax treaties with foreign countries, which
provide for sharing of tax information.
<PAGE>
PAGE 24
Estate tax: If you are a nonresident alien and you die while
owning a certificate, IDSC will need a statement from persons IDSC
believes are knowledgeable about your estate. The statement must
be in a form satisfactory to IDSC and must tell us that, on your
date of death, your estate did not include any property in the
United States for U.S. estate tax purposes. If we do not receive
the statement, we generally will not take action regarding your
certificate until we receive a transfer certificate from the IRS.
In general, a transfer certificate requires the opening of an
estate in the United States and provides assurance that the IRS
will not claim your certificate to satisfy estate taxes.
IMPORTANT: This information is a brief and selective summary of
certain federal tax rules that apply to this certificate. Tax
matters are highly individual and complex, and you should consult a
qualified tax advisor about your personal situation.
How your money is used and protected
Invested and guaranteed by IDSC
The IDS Flexible Savings Certificate is issued and guaranteed by
IDSC, a wholly owned subsidiary of AEFC. We are by far the largest
issuer of face amount certificates in the United States, with total
assets of more than $___ billion and a net worth in excess of $___
million on Dec. 31, 1995.
We back our certificates by investing the money received and
keeping the invested assets on deposit. Our investments generate
interest and dividends, out of which we pay:
o interest to certificate owners
o various expenses, including taxes, fees to AEFC for advisory
and other services and distribution fees to American Express
Financial Advisors, Inc.
For a review of significant events relating to our business, see
"Management's discussion and analysis of financial condition and
results of operations." Our certificates are not rated by a
national rating agency.
Most banks and thrifts offer investments known as certificates of
deposit (CDs) that are similar to our certificates in many ways.
Early withdrawals of bank CDs often result in penalties. Banks and
thrifts generally have federal deposit insurance for their deposits
and lend much of the money you deposit to individuals, businesses
and other enterprises. Other financial institutions may offer
investments with comparable combinations of safety and return on
investment.
Regulated by government
Because the IDS Flexible Savings Certificate is a security, its
offer and sale are subject to regulation under federal and state <PAGE>
PAGE 25
securities laws. (It is a face-amount certificate--not a bank
product, an equity investment, a form of life insurance or an
investment trust.)
The federal Investment Company Act of 1940 requires us to keep
investments on deposit in a segregated custodial account to protect
all of our outstanding certificates. These investments back the
entire value of your certificate account. Their amortized cost
must exceed the required carrying value of the outstanding
certificates by at least $250,000. As of Dec. 31, 1994, the
amortized cost of these investments exceeded the required carrying
value of our outstanding certificates by more than $121 million.
Backed by our investments
Our investments are varied and of high quality. This was the
composition of our portfolio as of Dec. 31, 1994:
Type of investment Net amount invested
Corporate and other bonds 31%
Government agency bonds 27%
Preferred stocks 23%
Mortgages 9%
Municipal bonds 5%
Cash and cash equivalents 5%
More than 95% of our securities portfolio (bonds and preferred
stocks) is rated investment grade. For additional information
regarding securities ratings, please refer to Note 3B in the
financial statements.
Most of our investments are on deposit with American Express Trust
Company (formerly IDS Trust Company), Minneapolis, although we also
maintain separate deposits as required by certain states. AEFC is
a wholly owned subsidiary of American Express Company. Copies of
our Dec. 31, 1995 schedule of Investments in Securities of
Unaffiliated Issuers are available upon request. For comments
regarding the valuation, carrying values and unrealized
appreciation (depreciation) of investment securities, see Notes 1,
2 and 3 to the financial statements.
Investment policies
In deciding how to diversify the portfolio--among what types of
investments in what amounts--the officers and directors of IDSC use
their best judgment, subject to applicable law. The following
policies currently govern our investment decisions:
Purchasing securities on margin: We will not purchase any
securities on margin or participate on a joint basis or a joint-
and-several basis in any trading account in securities.
Commodities: We have not and do not intend to purchase or sell
commodities or commodity contracts.
<PAGE>
PAGE 26
Underwriting: We do not intend to engage in the public
distribution of securities issued by others. However, if we
purchase unregistered securities and later resell them, we may be
considered an underwriter under federal securities laws.
Borrowing money: From time to time we have established a line of
credit if management believed borrowing was necessary or desirable.
While a line of credit does not currently exist, it may be
established again in the future. We may pledge some of our assets
as security. We may occasionally use repurchase agreements as a
way to borrow money. Under these agreements, we sell debt
securities to our lender, and repurchase them at the sales price
plus an agreed-upon interest rate within a specified period of
time.
Real estate: We may invest directly in real estate, though we have
not generally done so in the past. We do invest in mortgage loans.
Lending securities: We may lend some of our securities to broker-
dealers and receive cash equal to the market value of the
securities as collateral. We invest this cash in short-term
securities. If the market value of the securities goes up, the
borrower pays us additional cash. During the course of the loan,
the borrower makes cash payments to us equal to all interest,
dividends and other distributions paid on the loaned securities.
We will try to vote these securities if a major event affecting our
investment is under consideration.
When-issued securities: Most of our investments are in debt
securities, some of which are purchased on a when-issued basis. It
may take as long as 45 days or more before these securities are
issued and delivered to us. We generally do not pay for these
securities or start earning on them until delivery. We have
established procedures to ensure that sufficient cash is available
to meet when-issued commitments.
Financial transactions: We buy or sell various types of options
contracts for hedging purposes or as a trading technique to
facilitate securities purchases or sales. We buy interest rate
caps for hedging purposes. These pay us a return if interest rates
rise above a specified level. IDSC may enter into other financial
transactions, including futures and other derivatives, for the
purpose of managing the interest rate exposures associated with
IDSC's assets or liabilities. Derivatives are financial
instruments whose performance is derived, at least in part, from
the performance of an underlying asset, security or index. A small
change in the value of the underlying asset, security or index may
cause a sizable gain or loss in the fair value of the derivative.
Illiquid securities: A security is illiquid if it cannot be sold
in the normal course of business within seven days at approximately
its current market value. Some investments cannot be resold to the
U.S. public because of their terms or government regulations. All
securities, however can be sold in private sales, and many may be
sold to other institutions and qualified buyers or on foreign <PAGE>
PAGE 27
markets. IDSC's investment advisor will follow guidelines
established by the board and consider relevant factors such as the
nature of the security and the number of likely buyers when
determining whether a security is illiquid. No more than 15% of
IDSC's investment portfolio will be held in securities that are
illiquid. In valuing its investment portfolio to determine this
15% limit, IDSC will use statutory accounting. This means that,
for this purpose, the portfolio will be valued in accordance with
applicable investment statutes rather than generally accepted
accounting principles.
Restrictions: There are no restrictions on concentration of
investments in any particular industry or group of industries or on
rates of portfolio turnover.
How your money is managed
Relationship between IDSC and AEFC
IDSC was originally organized as Investors Syndicate of America,
Inc., a Minnesota corporation, on Oct. 15, 1940, and began business
as an issuer of face amount investment certificates on Jan. 1,
1941. The company became a Delaware corporation on Dec. 31, 1977,
and changed its name to IDS Certificate Company on April 2, 1984.
Before IDSC was created, AEFC (formerly known as IDS Financial
Corporation) our parent company and organizer, had issued similar
certificates since 1894. As of Jan. 1, 1995, IDS Financial
Corporation changed its name to AEFC. IDSC, IDS Financial
Corporation and now AEFC have never failed to meet their
certificate payments.
During its many years in operation, AEFC has become a leading
manager of investments in mortgages and securities. American
Express Advisors Inc., a wholly owned subsidiary of AEFC, provides
a broad range of financial planning services for individuals and
businesses through its nationwide network of more than 175 offices
and more than 7,800 financial advisors. American Express Financial
Advisors Inc. financial planning services are comprehensive,
beginning with a detailed written analysis that's tailored to your
needs. Your analysis may address one or all of these six essential
areas: financial position, protection planning, investment
planning, income tax planning, retirement planning and estate
planning.
AEFC itself is a wholly owned subsidiary of American Express
Company, a financial services company with executive offices at
American Express Tower, World Financial Center, New York, NY 10285.
American Express Company is a financial services company engaged
through subsidiaries in other businesses including:
o travel related services (including American ExpressR Card and
Travelers Cheque operations through American Express Travel
Related Services Company, Inc. and its subsidiaries), and
o international banking services (through American Express Bank
Ltd. and its subsidiaries).<PAGE>
PAGE 28
American Express Financial Advisors, Inc. is not a bank, and the
securities offered by it, such as face amount certificates issued
by IDSC, are not backed or guaranteed by any bank, nor are they
insured by the FDIC.
Capital structure and certificates issued
IDSC has authorized, issued and has outstanding 150,000 shares of
common stock, par value of $10 per share. AEFC owns all of the
outstanding shares.
As of Dec. 31, 1995, IDSC had issued (in face amount)
$______________ of installment certificates and $______________ of
single payment certificates.
Investment management and services
Under an Investment Advisory and Services Agreement, AEFC acts as
our investment advisor and is responsible for:
o providing investment research,
o making specific investment recommendations
o executing purchase and sale orders according to our
policy of obtaining the best price and execution.
All these activities are subject to direction and control by our
board of directors and officers. Our agreement with AEFC requires
annual renewal by our board, including a majority of directors who
are not interested persons of AEFC or IDSC as defined in the
federal Investment Company Act of 1940.
For its services, we pay AEFC a monthly fee, equal on an annual
basis to a percentage of the total book value of certain assets
(included assets):
Advisory and services fee computation:
Percentage of
Included assets total book value
First $250 million 0.75%
Next 250 million 0.65
Next 250 million 0.55
Next 250 million 0.50
Any amount over $1 billion 0.45
Included assets are all assets of IDSC except mortgage loans, real
estate, and any other asset on which we pay an advisory or service
fee.
Advisory and services fees for the past three years:
Percentage of
Year Total fees included assets
1995 $ %
1994 $13,565,432 0.51
1993 $15,036,091 0.50<PAGE>
PAGE 29
Estimated advisory and services fees for 1996 are $__________.
Other expenses payable by IDSC: The Investment Advisory and
Services Agreement provides that we will pay:
o costs incurred by us in connection with real estate and
mortgages,
o taxes,
o depository and custodian fees,
o brokerage commissions,
o fees and expenses for services not covered by other agreements
and provided to us at our request, or by requirement, by
attorneys, auditors, examiners and professional consultants
who are not officers or employees of AEFC,
o fees and expenses of our directors who are not officers or
employees of AEFC,
o provision for certificate reserves (interest accrued on
certificate owner accounts), and
o expenses of customer settlements not attributable to sales
function.
Distribution
Under a Distribution Agreement with American Express Financial
Advisors, Inc. we pay for the distribution of this certificate as
follows:
o 0.25% of the initial payment on the issue date of the
certificate, and
o 0.25% of the certificate's reserve at the beginning of the
second and subsequent quarters from issue date. This fee is
not assessed to your certificate account.
For certificates paying a special promotional coupon rate described
in "Rates for new purchases" under "About the certificate,"
American Express Financial Advisors Inc. waives its distribution
fee.
Total distribution fees paid to American Express Financial
Advisors, Inc. for all series of certificates amounted to
$__________ during the year ended Dec. 31, 1995. We expect to pay
American Express Financial Advisors Inc. distribution fees
amounting to $__________ during 1996.
See Note 1 to financial statements regarding deferral of
distribution fee expense.
American Express Financial Advisors Inc. pays commissions to its
financial advisors and pays other selling expenses in connection
with services to us. Our board of directors, including a majority
of directors who are not interested persons of American Express
Financial Advisors, Inc. or IDSC, approved this distribution
agreement.
<PAGE>
PAGE 30
Employment of other American Express affiliates
AEFC may employ affiliates of American Express Company as executing
broker for our portfolio transactions only if:
o we receive prices and executions at least as favorable as
those offered by qualified independent brokers performing
similar services;
o the affiliate charges us commissions consistent with those
charged to comparable unaffiliated customers for similar
transactions; and
o the affiliate's employment is consistent with the terms of the
current Investment Advisory and Services Agreement and federal
securities laws.
Directors and officers
IDSC's directors, chairman, president and controller are elected
annually for a term of one year. The other executive officers are
appointed by the president.
We paid a total of $______ during 1995 to directors not employed by
AEFC.
Board of directors
David R. Hubers*
Born in 1943
Director since 1987
President and chief executive officer of AEFC since 1993. Senior
vice president and chief financial officer of AEFC from 1984 to
1993.
Charles W. Johnson
Born in 1929
Director since 1989
Former vice president and group executive, Industrial Systems, with
Honeywell Inc. Retired 1989.
Edward Landes
Born in 1919
Director since 1984
Development consultant. Former sales manager - Supplies Division
and district manager - Data Processing Division of IBM Corporation.
Retired 1983.
John V. Luck Ph.D.
Born in 1926
Director since 1987
Former senior vice president - Science and Technology with General
Mills, Inc. Employed with General Mills Inc. since 1970. Retired
1987.
<PAGE>
PAGE 31
James A. Mitchell*
Born in 1941
Director since 1994
Chairman of the board of directors since 1994. Executive vice
president - marketing and products of AEFC since 1994. Senior vice
president - insurance operations of AEFC and president and chief
executive officer of IDS Life Insurance Company from 1986 to 1994.
Harrison Randolph
Born in 1916
Director since 1968
Gordon H. Ritz
Born in 1926
Director since 1968
President, Con Rad Broadcasting Corp. Director, Sunstar Foods and
Mid-America Publishing.
Stuart A. Sedlacek*
Born in 1957
Director since 1994
President since 1994. Vice president - assured assets of AEFC
since 1994. Vice president and portfolio manager from 1988 to
1994. Executive vice president - assured assets of IDS Life
Insurance Company since 1994.
*"Interested Person" of IDSC as that term is defined in Investment
Company Act of 1940.
Executive officers
Stuart A. Sedlacek
Born in 1957
President since 1994.
Morris Goodwin Jr.
Born in 1951
Vice president and treasurer since 1989.
Vice president and corporate treasurer of AEFC since 1989. Chief
financial officer and treasurer of American Express Trust Company
from 1988 to 1989.
Timothy S. Meehan
Born in 1957
Secretary since 1995
Secretary of AEFC and American Express Financial Advisors Inc.
since 1995. Senior counsel to AEFC since 1995. Counsel from 1990
to 1995.
<PAGE>
PAGE 32
Lorraine R. Hart
Born in 1951
Vice president-investments since 1994.
Vice President - insurance investments of AEFC since 1989. Vice
president, investments of IDS Life Insurance Company since 1992.
Jay C. Hatlestad
Born in 1957
Vice president and controller of IDS Certificate Company
since 1994.
Manager of investment accounting of IDS Life Insurance Company from
1986 to 1994.
Bruce A. Kohn
Born in 1951
Vice president and general counsel since 1993.
Counsel to AEFC since 1992. Associate counsel from 1987 to 1992.
F. Dale Simmons
Born in 1937
Vice president - Real Estate Loan Management since 1993.
Vice president of AEFC since 1992. Senior portfolio manager of
AEFC since 1989. Assistant vice president from 1987 to 1992.
The officers and directors as a group beneficially own less than 1%
of the common stock of American Express Company.
IDSC has provisions in its bylaws relating to the indemnification
of its officers and directors against liability, as permitted by
law. Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers or
persons controlling the registrant pursuant to the foregoing
provisions, the registrant has been informed that in the opinion of
the SEC such indemnification is against public policy as expressed
in the Act and is therefore unenforceable.
Auditors
A firm of independent auditors audits our financial statements at
the close of each fiscal year (Dec. 31). Copies of our annual
financial statements (audited) and semiannual financial statements
(unaudited) are available to any certificate owner upon request.
Ernst & Young LLP, Minneapolis, has audited the financial
statements for each of the years in the three-year period ended
Dec. 31, 1995. These statements are included in this prospectus.
Ernst & Young LLP is also the auditor for American Express Company,
the parent company of AEFC and IDSC.
Other certificates issued by IDSC: Your American Express financial
advisor can give you more information on four other certificates
issued by IDSC. These certificates offer a wide range of
investment terms and features.<PAGE>
PAGE 33
IDS Cash Reserve Certificate - A single payment certificate that
permits additional investments and on which IDSC guarantees
interest in advance for a three-month term.
IDS Installment Certificate - An installment payment certificate
that declares interest in advance for a three-month period and
offers bonuses in the third through sixth years for regular
investments.
IDS Future Value Certificate - A single payment certificate on
which IDSC guarantees interest in advance for a four, five, six,
seven, eight, nine or ten-year maturity.
IDS Stock Market Certificate - A single payment certificate that
calculates all or part of your interest based on stock market
performance, as measured by a broad stock market index, with IDSC's
guarantee of return of principal.<PAGE>
PAGE 34
(Back cover)
Quick telephone reference
American Express Telephone Transaction Service
Withdrawals, transfers, inquiries
National/Minnesota: 800-437-3133
Mpls./St. Paul area: 612-671-3800
TTY Service
For the hearing impaired
800-846-4293
American Express Infoline
Current rate information (automated response, TouchtoneR phones
only)
National/Minnesota: 800-272-4445
Mpls./St. Paul area: 612-671-1630
Your American Express financial advisor:
IDS Flexible Savings Certificate
IDS Tower 10
Minneapolis, MN 55440-0010
<PAGE>
PAGE 35
PART I. CROSS REFERENCE SHEET FOR PROSPECTUS
PURSUANT TO RULE 404(c)
IDS CASH RESERVE CERTIFICATE
AND VARIATIONS
Item Caption in
Number Prospectus
Item 1. Forepart of the
Registration Statement
and Outside Front Cover
Page of Prospectus.
Item 2. Inside Front and Where to get information about
Outside Back Cover Pages IDSC; Table of Contents.
of Prospectus.
Item 3. Summary Informa- About the certificate
tion, Risk Factors
and Ratio of Earnings
to Fixed Charges.
Item 4. Use of Proceeds. How your money is used and
protected; Investment policies
Item 5. Determination of Not Applicable.
Offering Price.
Item 6. Dilution. Not Applicable.
Item 7. Selling Security Not Applicable.
Holders.
Item 8. Plan of How your certificate
Distribution. is managed.
Item 9. Description of About the Certificate;
Securities to Be How to invest and withdraw
Registered. funds.
Taxes on your earnings.
Item 10. Interests of Not Applicable.
Named Experts and Counsel.
<PAGE>
PAGE 36
PART I. CROSS REFERENCE SHEET FOR PROSPECTUS
PURSUANT TO RULE 404(c) (Continued)
Item Caption in
Number Prospectus
Item 11. Information with Invested and guaranteed by
Respect to the Registrant. IDSC; Regulated by government;
Relationship between IDSC and
American Express Financial
Corporation; Capital structure
and certificates issued;
Directors and Officers.
Item 12. Disclosure of Directors and Officers
Commission Position on
Indemnification for
Securities Act Liabilities.
<PAGE>
PAGE 37
IDS Cash Reserve Certificate
Prospectus April 24, 1996
Earn attractive rates with ready access to your cash reserves.
IDS Cash Reserve Certificates are issued by IDS Certificate Company
(IDSC). You can purchase this certificate with an initial
investment of at least $1,000 or monthly investments of at least
$50. Your principal and interest are guaranteed by IDSC. Your
certificate earns a fixed rate of interest, declared every three
months. Investments in the certificate may continue for
successive three-month terms up to a total of 20 years from the
issue date of the certificate. Unless you receive prior
authorization from IDSC, your total investment, excluding interest
earned, cannot exceed $1 million. Your interest rate will be
determined as described in "About the certificate."
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION, NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OF ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
This certificate is backed by IDSC's investments on deposit rather
than guaranteed or insured by the government or someone else. See
"Invested and guaranteed by IDSC" and "Regulated by government"
under "How your money is used and protected."
This prospectus describes terms and conditions of your IDS Cash
Reserve Certificate. It contains facts that can help you decide if
the certificate is the right investment for you. Read the
prospectus before you invest and keep it for future reference. No
one has the authority to change the terms and conditions of the IDS
Cash Reserve Certificate as described in the prospectus, or to bind
IDSC by any statement not in it.
IDS Certificate Company
IDS Tower 10
Minneapolis, MN 55440-0010
1-800-437-3133
(612) 671-3800
(Minneapolis/St. Paul area)
TTY numbers:
1-800-846-4293 (toll free) or
(612) 671-1630
(Minneapolis/St. Paul area)
An American Express Company
<PAGE>
PAGE 38
INSIDE COVER:
Where to get information about IDSC
IDSC is subject to the reporting requirements of the Securities
Exchange Act of 1934. Reports and other information on IDSC are
filed with the Securities and Exchange Commission (SEC). Copies
can be obtained from the Public Reference Section of the SEC, 450
5th St., N.W., Washington, D.C. 20549, at prescribed rates. Or you
can inspect and copy information in person at the SEC's Public
Reference Section and at the following regional offices:
Northeast Regional Office
7 World Trade Center, Suite 1300
New York, NY 10048
Midwest Regional Office
Northwestern Atrium Center
500 West Madison St. Suite 1400
Chicago, IL 60611
Pacific Regional Office
5670 Wilshire Blvd., 11th Floor
Los Angeles, CA 90036
Initial interest rates
IDSC guarantees a fixed interest rate for each three-month term
during the life of the certificate. For your initial term, IDSC
guarantees that when the rate for new purchases takes effect, the
rate will be within a specified range of the average rate for
three-month certificates of deposit as published in the most recent
BANK RATE MONITOR Top 25 Market AverageTM, North Palm Beach, FL
33408, as explained under "About the certificate."
Here are the interest rates in effect on the date of this
prospectus, April 24, 1996:
Investment Simple Effective
amount interest rate* annualized yield**
$50 to $999
$1,000 to $24,999
$25,000 or more
*Rates may depend on factors described in "Rates for new purchases"
under "About the certificate."
**Assuming monthly compounding.
These rates may or may not be in effect when you apply to purchase
your certificate. Rates for later three-month terms are set at the
discretion of IDSC and may also differ from the rates shown here.
We reserve the right to issue other securities with different
terms.
<PAGE>
PAGE 39
Contents
About the certificate......
Investment amounts and terms...... p
Face amount and principal...... p
Value at maturity...... p
Receiving cash during the term...... p
Interest...... p
Rates for new purchases...... p
How to invest and withdraw funds......
Buying your certificate...... p
Additional investments...... p
Full and partial withdrawals...... p
When your certificate term ends p
Transfers to other accounts...... p
Retirement plans: special policies...... p
Transfer of ownership...... p
For more information...... p
Taxes on your earnings......
Retirement accounts p
Gifts to minors p
Foreign investors...... p
How your money is used and protected
Invested and guaranteed by IDSC...... p
Regulated by government...... p
Backed by our investments...... p
Investment policies...... p
How your money is managed
Relationship between IDSC and American
Express Financial Corporation...... p
Capital structure and certificates issued...... p
Investment management and services...... p
Distribution...... p
Employment of other American Express affiliates...p
Directors and officers...... p
Auditors...... p
Financial information......
Summary of selected financial information...... p
Management's discussion and analysis of
financial condition and results of operations......
Report of independent auditors...... p
Financial statements...... p
Notes to financial statements...... p
<PAGE>
PAGE 40
About the certificate
Investment amounts and terms
You can purchase this certificate with an initial investment of at
least $1,000 or monthly investments of at least $50 through
scheduled bank authorization or payroll deduction. Your total
investments over the life of the certificate may not exceed $1
million unless you receive prior authorization from IDSC.
The certificate may be used as an investment for your Individual
Retirement Account (IRA), 401(k) plan account or other qualified
retirement plan account. A minimum investment of $50 per month is
required for these types of accounts. If so used, the amount of
your contribution (investment) will be subject to any limitations
of the plan and applicable federal law.
Face amount and principal
The face amount of the certificate is the amount of your initial
investment, and will remain the same over the life of the
certificate.
The principal is the amount that is reinvested at the beginning of
each subsequent term, and is calculated as follows:
Principal equals Face Amount (initial investment)
plus At the end of a term, interest credited to
your account during the term
minus Any interest paid to you in cash
plus Any additional investments to your
certificate
minus Any withdrawals, fees and applicable
penalties.
For example: Assume your initial investment (face amount) of
$5,000 has earned $75 of interest during the term. You have not
taken any interest as cash, or made any withdrawals. You have
invested an additional $2,500 prior to the beginning of the next
term. Your principal for the next term will equal:
$5,000.00 Face Amount (initial investment)
plus $75.00 Interest credited to your account
minus ($0.00) Interest paid to you in cash
plus $2,500.00 Additional investment to your certificate
minus ($0.00) Withdrawals and applicable penalties
or fees
$7,575.00 Principal at the beginning of the next
term.
<PAGE>
PAGE 41
Value at maturity
Your certificate matures 20 years from its issue date. At
maturity, the value of your certificate will be the total of your
actual investment, plus credited interest not paid to you in cash,
less withdrawals, penalties and fees. When your certificate
matures, you will receive a check for your principal, plus any
credited interest, less any withdrawals, penalties and fees. Bank
authorizations will automatically be stopped at maturity or full
withdrawal.
Receiving cash during the term
If you need your money before your certificate matures, you may
withdraw part or all of its value at any time, less any penalties
that apply. Procedures for withdrawing money, as well as
conditions under which penalties apply, are described in "Full and
partial withdrawals" under "How to invest and withdraw funds."
Interest
Your investments earn interest from the date they are credited to
your account. Interest is compounded and credited at the end of
each certificate month (on the monthly anniversary of the issue
date).
IDSC declares and guarantees a fixed rate of interest for each
three-month term during the life of your certificate. We calculate
the amount of interest you earn each certificate month by:
o applying the interest rate then in effect to your balance
each day
o adding these daily amounts to get a monthly total
o subtracting interest accrued on any amount you withdraw
during the certificate month.
Interest is calculated on a 30-day month and 360-day year basis.
Rates for new purchases
When your application is accepted, and we have received your
initial investment, we will send you a confirmation showing the
rate that your investment will earn for the first term. For
accounts of $1,000 to $24,999.99 IDSC guarantees that this rate
will be within a range from 20 basis points (0.20%) below to 80
basis points (0.80%) above the average interest rate published for
3-month CDs in the BANK RATE MONITOR Top 25 Market AverageTM (the
BRM Average). For example, if the average rate most recently
published is 4.00%, our rate in effect for that week for amounts of
$1,000 to $24,999.99 would be between 3.80% to 4.80%. For accounts
of $25,000 or more, this rate will be within a range from 0 basis
points (0.0%) below to 100 basis points (1.00%) above the same
index rate. For accounts of less than $1,000, this rate will be
within a range of 90 basis points (0.90%) below to 10 basis points
(0.10%) above this average interest rate.
<PAGE>
PAGE 42
The BANK RATE MONITOR is a weekly magazine published in North Palm
Beach, FL 33408 by Advertising News Service Inc., an independent
national news organization that collects and disseminates
information about bank products and interest rates. Advertising
News Service Inc. has no connection with IDSC, American Express
Financial Corporation (AEFC), or any of their affiliates.
The BRM Average is an index of rates and annual effective yields
offered on various length certificates of deposit by large banks
and thrifts in 25 metropolitan areas. The frequency of compounding
varies among the banks and thrifts. Certificates of deposit in the
BRM Average are government insured fixed-rate time deposits.
The BANK RATE MONITOR may be available in your local library. To
obtain information on the current BRM Average rates, call the
Client Service Organization at the telephone numbers listed on the
back cover.
Rates for new purchases are reviewed and may change weekly.
Normally, the rate you receive will be the higher of:
o the rate in effect on the date of your application
o the rate in effect on the date your application is
accepted by IDSC.
However if your application bears a date more than seven days
before its receipt by IDSC, the rate you receive will be the higher
of:
o the rate in effect on the date your application is
accepted by IDSC
o the rate in effect seven days prior to receipt.
Except for specific promotions, IDSC guarantees an initial rate 25
basis points above the rate offered to the general public on this
IDS certificate if it is purchased by using the CD transfer service
offered by American Express Financial Advisors Inc. to help you
transfer money from a bank or thrift CD account to American Express
Financial Advisors Inc. investments. To be eligible for this rate,
you must transfer at least $10,000 from a CD account to IDSC to
purchase one or more IDS Cash Reserve Certificates and/or IDS
Flexible Savings Certificates, and this rate will only apply to
those certificates.
Promotions and pricing flexibility: From time to time, IDSC may
sponsor or participate in promotions involving one or more of the
certificates and their respective terms. For example, we may offer
different rates to new clients, to existing clients, or to
individuals who purchase or use other products or services offered
by American Express Financial Advisors Inc. or its affiliates.
Rates also may vary depending on the amount you invest, your
geographic location and whether the certificate is purchased for an
IRA or qualified retirement plan account. These promotions will
generally be for a specified period of time. If we offer a
promotion, the rates for new purchases will be within the range of
rates described under "Rates for new purchases," above.
<PAGE>
PAGE 43
Rates for future terms: Interest on your certificate for future
three-month terms may be greater or less than the rates you receive
during the first three months. In setting future rates, a primary
consideration will be the prevailing investment climate, including
3-month CD rates as reflected in the BRM Average. Nevertheless, we
have complete discretion as to what interest shall be declared
beyond the initial three-month term. If the BRM Average is no
longer publicly available or feasible to use, IDSC may use another
similar index as a guide for setting rates.
Performance: From February 1991 through February 1996, IDS Cash
Reserve yields were generally higher than average bank and thrift
3-month CD yields, as measured by the BRM Average (prior to January
13, 1993, yields were measured by the BRM National Index, an
average of CD yields in 10 cities).
Yield from May 1991 through February 1996
8% _____ IDS Cash Reserve Certificate
..... Money Market Deposit Account
6% ***** Certificate of Deposit - Three Month
4% Three lines comparing the yields for IDS Cash Reserve
Certificate versus money market deposit accounts and
2% three-month certificates of deposit, with IDS Cash
Reserve's line generally above the other two.
0%
1991 1992 1993 1994 1995 1996
*This graph compares past yields offered on IDS Cash Reserve
Certificate to those of 3-month CDs and money market deposit
accounts and should not be considered a prediction of future
performance.
How to invest and withdraw funds
Buying your certificate
Your American Express financial advisor will help you fill out and
submit an application to open an account with us and purchase a
certificate. We will process the application at our corporate
offices in Minneapolis. When your application is accepted, and we
have received your initial investment, we will send you a
confirmation of your purchase, indicating your account number and
applicable rate of interest for your first term, as described under
"Rates for new purchases." See "Purchase policies" below.
Additional investments
You may make additional investments at any time. Additional
investments must be at least $50 and your total investment, less
withdrawals, may not exceed $1 million (unless you receive prior
authorization from IDSC to invest more). You will earn interest on
additional investments from the date we accept them. IDSC will
send a confirmation of additional investments.
<PAGE>
PAGE 44
Important: When opening an account, you must provide IDSC with your
correct Taxpayer Identification Number (Social Security or Employer
Identification Number). See "Taxes on your earnings."
Purchase policies
o Investments must be received and accepted in the Minneapolis
headquarters on a business day before 3 p.m. Central time to
be included in your account that day. Otherwise your purchase
will be processed the next business day.
o You have 15 days from the date of purchase to cancel your
investment without penalty by either writing or calling the
Client Service Organization at the address or phone number on
the back of this prospectus. If you decide to cancel your
certificate within this 15-day period you will not earn any
interest.
o If you purchase a certificate with a personal check or other
non-guaranteed funds, AEFC will wait one day for the process
of converting your check to federal funds (e.g., monies of
member banks with the Federal Reserve Bank) before your
purchase will be accepted and you begin earning interest.
o IDSC has complete discretion to determine whether to accept an
application and sell a certificate.
o You must maintain a balance of at least $1,000 in your Cash
Reserve Certificate account unless you are using an authorized
systematic pay-in or payout arrangement. If you use a
scheduled pay-in arrangement, your minimum balance requirement
is $50.
o If you make no investments for a period of at least 12
consecutive months and your principal is less than $1,000, we
will send you a notice of our intent to cancel the
certificate. After the notice, if an investment is not made
within 60 days your certificate will be canceled, and we will
send you a check for its full value.
A number of special policies apply to purchases, withdrawals and
exchanges within IRAs, 401(k) plans and other qualified retirement
plans. See "Retirement plans: special policies."
Three ways to make investments
1
By scheduled investment plan
Contact your financial advisor to set up one of the following
scheduled plans for monthly investments:
o bank authorization (automatic deduction from your bank
account)
o automatic payroll deduction
o direct deposit of Social Security check
<PAGE>
PAGE 45
o other plan approved by IDSC
o monthly minimum investment must be $50.
To cancel a bank authorization, you must instruct IDSC in writing
or over the phone. We must receive notice at least three business
days before the date funds would normally be withdrawn from your
bank account.
2
By mail
For monthly or lump sum investments, send your check along with
your name and account number to:
Regular mail: Express mail:
American Express Financial American Express Financial
Advisors Inc. Advisors Inc.
Client Service Organization Client Service Organization
IDS Tower 10 733 Marquette Ave.
Minneapolis, MN 55440-0010 Minneapolis, MN 55402
3
By wire
If you have an established account, you may wire money to:
Norwest Bank Minneapolis
Routing No. 091000019
Minneapolis, MN
Attn: Domestic Wire Dept.
Give these instructions:
Credit IDS Account #00-30-015 for personal account # (your
account number) for (your name).
If this information is not included, the order may be rejected and
all money received, less any costs AEFC incurs, will be returned
promptly.
o Minimum amounts each wire investment: $1,000
o Wire orders can be accepted only on days when your bank, AEFC,
IDSC and Norwest Bank Minneapolis are open for business.
o Wire purchases are completed when wired payment is received
and we accept the purchase.
o Bank wire purchases are not sent until the next business day.
o Wire investments must be received and accepted in the
Minneapolis headquarters on a business day before 3 p.m.
Central time to be credited that day. Otherwise your purchase
will be processed the next business day.
<PAGE>
PAGE 46
o IDSC, AEFC and its other subsidiaries are not responsible for
any delays that occur in wiring funds, including delays in
processing by the bank.
o You must pay any fee the bank charges for wiring.
Full and partial withdrawals
You may withdraw your certificate for its full value at any time.
If you purchase this certificate for an IRA, 401(k), or other
retirement plan account, early withdrawals or cash payments of
interest taken prematurely may be subject to IRS penalty taxes.
o Complete withdrawal of your certificate is made by giving us
proper instructions.
To complete these transactions, see "Two ways to request a
withdrawal or transfer."
o If your withdrawal request is received in the Minneapolis
headquarters on a business day before 3 p.m. Central time, it
will be processed that day and payment will be sent the next
business day. Otherwise, your request will be processed one
business day later.
o You may make an unscheduled partial withdrawal of at least
$100 at any time.
o Interest payments in cash may be sent to you at the end of
each certificate month, quarter, or on a semiannual or annual
basis.
o Scheduled partial withdrawals may be sent to you monthly,
quarterly, semiannually or annually. The minimum withdrawal
amount is $50.
o Withdrawals before the end of the certificate month will
result in loss of interest on the amount withdrawn. You'll
get the best result by timing a withdrawal at the end of the
certificate month.
o Withdrawals that reduce your certificate's principal below a
break point for a lower interest rate will cause the remaining
principal to earn the lower interest rate for the rest of the
term from the date of the withdrawal.
o You may not make a withdrawal from your certificate if that
withdrawal causes your balance to fall below $1,000 unless you
are making bank authorization or payroll deduction payments or
taking systematic payments from your certificate. In these
instances, the remaining balance will earn the lower interest
in effect for balances of less than $1,000.
When your certificate term ends
Shortly before the end of your certificate's term we will send you
a notice indicating the interest rate that will apply to the new <PAGE>
PAGE 47
term. Unless you tell us otherwise, your certificate will
automatically continue for another term. The interest rate that
will apply to your new term will be the rate in effect on the day
the new term begins. This rate of interest will not be changed
during that term unless your certificate's principal falls below a
break point for a lower interest rate.
Other full and partial withdrawal policies:
o If you request a partial or full withdrawal of a certificate
recently purchased or added to by a check or money order that
is not guaranteed, we will wait for your check to clear.
Please expect a minimum of 10 days from the date of your
payment before IDSC mails a check to you. (A check may
be mailed earlier if your bank provides evidence that
your check has cleared.)
o If your certificate is pledged as collateral, any withdrawal
will be delayed until we get approval from the secured party.
o Any payments to you may be delayed under applicable rules,
regulations or orders of the SEC.
Transfers to other accounts
You may transfer part or all of your certificate for any other IDSC
certificate or into another existing American Express Financial
Advisors Inc. account that has the same registered ownership
(subject to any terms and conditions that may apply).
Two ways to request a withdrawal or transfer
1
By phone
Call the Client Service Organization at the telephone numbers
listed on the back cover between 8 a.m. and 6 p.m. your local time.
o Maximum phone request: $50,000
o Transfers into an American Express Financial Advisors Inc.
account with the same ownership.
o We will honor any telephone request believed to be authentic
and will use reasonable procedures to confirm that they are.
This includes asking identifying questions and tape recording
calls. So long as reasonable procedures are followed, neither
IDSC nor AEFC or its other subsidiaries will be liable for any
loss resulting from fraudulent requests.
You may request that telephone withdrawals not be authorized from
your account by writing the Client Service Organization.
2
By mail
Send your name, account number and request for a withdrawal or
transfer to:<PAGE>
PAGE 48
Regular mail:
American Express Financial Advisors Inc.
Client Service Organization
IDS Tower 10
Minneapolis, MN 55440-0010
Express mail:
American Express Financial Advisors Inc.
Client Service Organization
733 Marquette Ave.
Minneapolis, MN 55402
Written requests are required for:
o Transactions over $50,000
o Pension plans and custodial accounts where the minor has
reached the age at which custodianship should terminate.
o Transferring into an American Express Financial Advisors Inc.
account with a different ownership (all current registered
owners must sign the request).
o A telephone withdrawal request will not be allowed within 30
days of a phoned-in address change.
Three ways to receive payment when you withdraw funds
1
By regular or express mail
o Mailed to address on record; please allow seven days for
mailing
o Payable to name(s) you requested
o For express mail, you will pay charges that vary depending on
the courier you select. For a partial withdrawal leaving a
remaining balance of more than $1,000, these charges will be
deducted from the remaining balance. If the remaining balance
is less than $1,000, or it is a full withdrawal, charges are
deducted from proceeds of the withdrawal.
2
By wire
o Minimum wire withdrawal: $1,000
o Request that money be wired to your bank
o Bank account must be in same ownership as IDSC account
o Pre-authorization required. Complete the bank wire
authorization section in the application or use a form
supplied by your American Express financial advisor. All
registered owners must sign.
<PAGE>
PAGE 49
o Service fee, if any, is deducted from your balance (for
partial withdrawals) or from the proceeds of a full
withdrawal.
3
By electronic transfer
o Available only for preauthorized scheduled partial withdrawals
and other full or partial withdrawals
o No charge
o Deposited electronically in your bank account
o Allow three to five business days from request to deposit
Retirement plans: special policies
o If the certificate is purchased for a 401(k) plan or other
qualified retirement plan account, the terms and conditions of
the certificate apply to the plan as the owner of this
certificate. However, the terms of the plan, as interpreted
by the plan trustee or administrator, will determine how a
participant's individual account under the plan is
administered. These terms may differ from the terms of the
certificate.
o If your certificate is held in a Custodial Retirement Plan (or
Keogh plan), special rules may apply at maturity. If no other
investment instructions are provided directing how to handle
your certificate at maturity, the full value of the
certificate will automatically transfer to a new or existing
cash management account according to the rules outlined in the
Custodial Retirement Plan document.
o The annual custodial fee for IRA or non-401(k) qualified
retirement plans may be deducted from your certificate
account. It may reduce the amount payable at maturity or the
amount received upon an early withdrawal.
o Retirement plan withdrawals may be subject to withdrawal
penalties or loss of interest even if they are not subject to
federal tax penalties.
o If you withdraw all funds from your last account in an IRA
plan, a $25 termination fee will apply.
o The IRA termination fee will be waived if withdrawal occurs
upon the owner's death.
Transfer of ownership
While the certificate is not negotiable, IDSC will transfer
ownership upon written notification to our Client Service
Organization. However, if you have purchased your certificate for
an IRA, 401(k) plan or other qualified retirement plan, you may be
unable to transfer or assign the certificate without losing the
account's favorable tax status. Please consult your tax advisor.<PAGE>
PAGE 50
For more information
For information on purchases, withdrawals, exchanges, transfers of
ownership, proper instructions and other service questions
regarding your certificate, please consult your financial advisor
or call the Client Service Organization at the telephone numbers
listed on the back cover.
Taxes on your earnings
Interest on your certificate is taxable when credited to your
account. Each calendar year we provide the certificate owner and
the IRS with reports of all earnings over $10 (Form 1099).
Withdrawals are reported to the certificate owner and the IRS on
Form 1099-B, Proceeds from Broker Transactions.
Retirement accounts
If you are using the certificate as an investment for an IRA,
401(k) plan account or other qualified retirement plan account,
income tax rules for your IRA or qualified plan apply. Generally,
you will pay no income taxes on your investment's earnings--and, in
many cases, on part or all of the investment itself--until you
begin to make withdrawals.
IDSC will withhold federal income taxes of 10% on IRA withdrawals
unless you tell us not to. IDSC is required to withhold federal
income taxes of 20% on most other qualified plan distributions,
unless the distribution is directly rolled over to another
qualified plan or IRA.
Withdrawals from retirement accounts are generally subject to a
penalty tax of 10% by the IRS if you make them before age 59-1/2,
unless you are disabled or if they are made by your beneficiary in
the event of your death. Other exceptions also may apply. Also,
withdrawals of principal during a certificate month may be subject
to the certificate's provision for loss of interest.
Consult your tax advisor to see how these rules apply to you before
you request a distribution from your plan or IRA.
Gifts to minors
The certificate may be given to a minor under either the Uniform
Gifts or Uniform Transfers to Minors Act (UGMA/UTMA), whichever
applies in your state. UGMAs/UTMAs are irrevocable. Generally,
under federal tax laws, income over $1,200 on property owned by
children under age 14 will be taxed at the parents' marginal tax
rate, while income on property owned by children 14 or older will
be taxed at the child's rate.
Your Taxpayer Identification Number (TIN) and backup withholding:
As with any financial account you open, you must list your current
and correct Taxpayer Identification Number (TIN)--either your
Social Security or Employer Identification Number. The TIN must be
certified under penalties of perjury on your application when you
open an account with IDSC.<PAGE>
PAGE 51
If you don't provide the TIN to IDSC, or the TIN you report is
incorrect, you could be subject to backup withholding of 31% of
your interest earnings. You could also be subject to further
penalties, such as:
o a $50 penalty for each failure to supply your correct TIN
o a civil penalty of $500 if you make a false statement that
results in no backup withholding
o criminal penalties for falsifying information.
You could also be subject to backup withholding because you failed
to report interest on your tax return as required.
To help you determine the correct TIN to use on various types of
accounts, please use this chart:
Use the Social Security or
For this type of account Employer Identification Number of
Individual or joint account The individual or first person listed
on the account
Custodian account of a The minor
minor (Uniform Gifts/
Transfers to Minors Act)
A living trust The grantor-trustee (the person who puts
the money into the trust)
An irrevocable trust, The legal entity (not the personal
pension trust or estate representative or trustee, unless no
legal entity is designated in the
account title)
Sole proprietorship or The owner or partnership
partnership
Corporate The corporation
Association, club or The organization
tax-exempt organization
For details on TIN requirements, ask your financial advisor or
local American Express Financial Advisors Inc. office for Federal
Form W-9, "Request for Taxpayer Identification Number and
Certification."
Foreign investors
If you are not a citizen or resident of the United States, you must
supply IDSC with Form W-8, Certificate of Foreign Status when you
purchase your certificate, and you must resupply it every three
years. You must also supply a current mailing address and an
address of foreign residency, if different. IDSC will not accept
purchases of certificates by nonresident aliens without an
appropriately certified Form W-8 (or approved substitute). Also,
if you do not supply Form W-8 you will be subject to backup
withholding on interest payments and withdrawals.<PAGE>
PAGE 52
Interest on the certificate is "portfolio interest" as defined in
U.S. Internal Revenue Code Section 871(h) if earned by a
nonresident alien. Even though your interest income is not taxed
by the U.S. government, it will be reported at year end to you and
to the U.S. government on a Form 1042S, Foreign Person's U.S.
Source Income Subject to Withholding. The United States
participates in various tax treaties with foreign countries, which
provide for sharing of tax information.
Estate tax: If you are a nonresident alien and you die while
owning a certificate, IDSC will need a statement from persons IDSC
believes are knowledgeable about your estate. The statement must
be in a form satisfactory to IDSC and must tell us that, on your
date of death, your estate did not include any property in the
United States for U.S. estate tax purposes. If we do not receive
the statement, we generally will not take action regarding your
certificate until we receive a transfer certificate from the IRS or
satisfactory evidence that the estate is being administered by an
executive or administrator appointed, qualified and acting within
the United States. In general, a transfer certificate provides
assurance that the IRS will not claim your IDS certificate to
satisfy estate taxes.
Important: This information is a brief and selective summary of
certain federal tax rules that apply to this certificate. Tax
matters are highly individual and complex, and you should consult a
qualified tax advisor about your personal situation.
How your money is used and protected
Invested and guaranteed by IDSC
The IDS Cash Reserve Certificate is issued and guaranteed by IDSC,
a wholly owned subsidiary of AEFC. We are by far the largest
issuer of face amount certificates in the United States, with total
assets of more than $___ billion and a net worth in excess of $___
million on Dec. 31, 1995.
We back our certificates by investing the money received and
keeping the invested assets on deposit. Our investments generate
interest and dividends, out of which we pay:
o interest to certificate owners
o various expenses, including taxes, fees to AEFC for advisory
and other services and distribution fees to American Express
Financial Advisors Inc.
For a review of significant events relating to our business, see
"Management's discussion and analysis of financial condition and
results of operations." Our certificates are not rated by a
national rating agency.
Most banks and thrifts offer investments known as certificates of
deposit (CDs) that are similar to our certificates in many ways.
Early withdrawals of bank CDs often result in penalties. Banks and
<PAGE>
PAGE 53
thrifts generally have federal deposit insurance for their deposits
and lend much of the money you deposit to individuals, businesses
and other enterprises. Other financial institutions may offer
investments with comparable combinations of safety and return on
investment.
Regulated by government
Because the IDS Cash Reserve Certificate is a security, its offer
and sale are subject to regulation under federal and state
securities laws. (It is a face-amount certificate--not a bank
product, an equity investment, a form of life insurance or an
investment trust.)
The federal Investment Company Act of 1940 requires us to keep
investments on deposit in a segregated custodial account to protect
all of our outstanding certificates. These investments back the
entire value of your certificate account. Their amortized cost
must exceed the required carrying value of the outstanding
certificates by at least $250,000. As of Dec. 31, 1995, the
amortized cost of these investments exceeded the required carrying
value of our outstanding certificates by more than $___ million.
Backed by our investments
Our investments are varied and of high quality. This was the
composition of our portfolio as of Dec. 31, 1995:
Net amount
Type of investment invested
Corporate and other bonds 31%
Government agency bonds 27
Preferred stocks 23
Mortgages 9
Municipal bonds 5
Cash and cash equivalents 5
More than 95% of our securities portfolio (bonds and preferred
stocks) is rated investment grade. For additional information
regarding securities ratings, please refer to Note 3B in the
financial statements.
Most of our investments are on deposit with American Express Trust
Company (formerly IDS Bank & Trust), Minneapolis, although we also
maintain separate deposits as required by certain states. American
Express Trust Company is a wholly owned subsidiary of AEFC. Copies
of our Dec. 31, 1995 schedule of Investments in Securities of
Unaffiliated Issuers are available upon request. For comments
regarding the valuation, carrying values and unrealized
appreciation (depreciation) of investment securities, see Notes 1,
2 and 3 to the financial statements.
Investment policies
In deciding how to diversify the portfolio--among what types of
investments in what amounts--the officers and directors of IDSC use
<PAGE>
PAGE 54
their best judgment, subject to applicable law. The following
policies currently govern our investment decisions:
Purchasing securities on margin: We will not purchase any
securities on margin or participate on a joint basis or a joint-
and-several basis in any trading account in securities.
Commodities: We have not and do not intend to purchase or sell
commodities or commodity contracts.
Underwriting: We do not intend to engage in the public
distribution of securities issued by others. However, if we
purchase unregistered securities and later resell them, we may be
considered an underwriter under federal securities laws.
Borrowing money: From time to time we have established a line of
credit if management believed borrowing was necessary or desirable.
While a line of credit does not currently exist, it may be
established again in the future. We may pledge some of our assets
as security. We may occasionally use repurchase agreements as a
way to borrow money. Under these agreements, we sell debt
securities to our lender, and repurchase them at the sales price
plus an agreed-upon interest rate within a specified period of
time.
Real estate: We may invest directly in real estate, though we have
not generally done so in the past. We do invest in mortgage loans.
Lending securities: We may lend some of our securities to broker-
dealers and receive cash equal to the market value of the
securities as collateral. We invest this cash in short-term
securities. If the market value of the securities goes up, the
borrower pays us additional cash. During the course of the loan,
the borrower makes cash payments to us equal to all interest,
dividends and other distributions paid on the loaned securities. We
will try to vote these securities if a major event affecting our
investment is under consideration.
When-issued securities: Most of our investments are in debt
securities, some of which are purchased on a when-issued basis. It
may take as long as 45 days or more before these securities are
issued and delivered to us. We generally do not pay for these
securities or start earning on them until delivery. We have
established procedures to ensure that sufficient cash is available
to meet when-issued commitments.
Financial transactions: We buy or sell various types of options
contracts for hedging purposes or as a trading technique to
facilitate securities purchases or sales. We buy interest rate
caps for hedging purposes. These pay us a return if interest rates
rise above a specified level. IDSC may enter into other financial
transactions, including futures and other derivatives, for the
purpose of managing the interest rate exposures associated with
IDSC's assets or liabilities. Derivatives are financial
instruments whose performance is derived, at least in part, from <PAGE>
PAGE 55
the performance of an underlying asset, security or index. A small
change in the value of the underlying asset, security or index may
cause a sizable gain or loss in the fair value of the derivative.
Illiquid securities: A security is illiquid if it cannot be sold
in the normal course of business within seven days at approximately
its current market value. Some investments cannot be resold to the
U.S. public because of their terms or government regulations. All
securities, however can be sold in private sales, and many may be
sold to other institutions and qualified buyers or on foreign
markets. IDSC's investment advisor will follow guidelines
established by the board and consider relevant factors such as the
nature of the security and the number of likely buyers when
determining whether a security is illiquid. No more than 15% of
IDSC's investment portfolio will be held in securities that are
illiquid. In valuing its investment portfolio to determine this
15% limit, IDSC will use statutory accounting. This means that,
for this purpose, the portfolio will be valued in accordance with
applicable investment statutes rather than generally accepted
accounting principles.
Restrictions: There are no restrictions on concentration of
investments in any particular industry or group of industries or on
rates of portfolio turnover.
How your money is managed
Relationship between IDSC and AEFC
IDSC was originally organized as Investors Syndicate of America,
Inc., a Minnesota corporation, on Oct. 15, 1940, and began business
as an issuer of face amount investment certificates on Jan. 1,
1941. The company became a Delaware corporation on Dec. 31, 1977,
and changed its name to IDS Certificate Company on April 2, 1984.
Before IDSC was created, AEFC (formerly known as IDS Financial
Corporation) had issued similar certificates since 1894. As of
Jan. 1, 1995 IDS Financial Corporation became AEFC. IDSC and AEFC
have never failed to meet their certificate payments.
During its many years in operation, AEFC has become a leading
manager of investments in mortgages and securities. As of Dec. 31,
1995, AEFC managed investments, including its own, of more than
$___ billion. American Express Financial Advisors Inc., a wholly
owned subsidiary of AEFC, provides a broad range of financial
planning services for individuals and businesses through its
nationwide network of more than ___ offices and more than ____
financial advisors. AEFC financial planning services are
comprehensive, beginning with a detailed written analysis that's
tailored to your needs. Your analysis may address one or all of
these six essential areas: financial position, protection
planning, investment planning, income tax planning, retirement
planning and estate planning.
<PAGE>
PAGE 56
AEFC itself is a wholly owned subsidiary of American Express
Company, a financial services company with executive offices at
American Express Tower, World Financial Center, New York, NY 10285.
American Express Company is a financial services company engaged
through subsidiaries in other business including:
o travel related services (including American ExpressR Card and
Travelers Cheque operations through American Express Travel
Related Services Company, Inc. and its subsidiaries), and
o international banking services (through American Express Bank
Ltd. and its subsidiaries).
American Express Financial Advisors Inc. is not a bank, and the
securities offered by it, such as face amount certificates issued
by IDSC, are not backed or guaranteed by any bank, nor are they
insured by the FDIC.
Capital structure and certificates issued
IDSC has authorized, issued and has outstanding 150,000 shares of
common stock, par value of $10 per share. AEFC owns all of the
outstanding shares.
As of Dec. 31, 1995, IDSC had issued (in face amount)
$______________ of installment certificates and $______________ of
single payment certificates.
Investment management and services
Under an Investment Advisory and Services Agreement, AEFC acts as
our investment advisor and is responsible for:
o providing investment research,
o making specific investment recommendations
o executing purchase and sale orders according to our
policy of obtaining the best price and execution.
All these activities are subject to direction and control by our
board of directors and officers. Our agreement with AEFC requires
annual renewal by our board, including a majority of directors who
are not interested persons of AEFC or IDSC as defined in the
federal Investment Company Act of 1940.
For its services, we pay AEFC a monthly fee, equal on an annual
basis to a percentage of the total book value of certain assets
(included assets).
Advisory and Services Fee Computation
Included Assets Percentage of Total Book Value
First $250 million 0.75%
Next 250 million 0.65
Next 250 million 0.55
Next 250 million 0.50
Any amount over $1 billion 0.45
<PAGE>
PAGE 57
Included assets are all assets of IDSC except mortgage loans, real
estate, and any other asset on which we pay an advisory or service
fee.
Advisory and services fees for the past three years were:
Percentage of
Year Total fees included assets
1995 $__________ 0.__%
1994 $13,565,432 0.__
1993 $15,036,091 0.__
Estimated advisory and services fees for 1996 are $__________.
Other expenses payable by IDSC: The Investment Advisory and
Services Agreement provides that we will pay:
o costs incurred by us in connection with real estate and
mortgages,
o taxes,
o depository and custodian fees,
o brokerage commissions,
o fees and expenses for services not covered by other agreements
and provided to us at our request, or by requirement, by
attorneys, auditors, examiners and professional consultants
who are not officers or employees of AEFC,
o fees and expenses of our directors who are not officers or
employees of AEFC,
o provision for certificate reserves (interest accrued on
certificate owner accounts), and
o expenses of customer settlements not attributable to sales
function.
Distribution
Under a Distribution Agreement with American Express Financial
Advisors Inc., we pay for the distribution of this certificate as
follows:
o 0.25% of the initial payment on the issue date of the
certificate, and
o 0.25% of the certificate's reserve at the beginning of the
second and subsequent quarters from issue date. This fee is
not assessed to your certificate account.
Total distribution fees paid to American Express Financial Advisors
Inc. for all series of certificates amounted to $__________ during
the year ended Dec. 31, 1995. We expect to pay American Express
Financial Advisors Inc. distribution fees amounting to $__________
during 1996.
See Note 1 to Financial Statements regarding deferral of
distribution fee expense.
<PAGE>
PAGE 58
American Express Financial Advisors Inc. pays commissions to its
financial advisors and pays other selling expenses in connection
with services to us. Our board of directors, including a majority
of directors who are not interested persons of American Express
Financial Advisors Inc. or IDSC, approved this distribution
agreement.
Employment of other American Express affiliates
AEFC may employ an affiliate of American Express Company as
executing broker for our portfolio transactions only if:
o we receive prices and executions at least as favorable as
those offered by qualified independent brokers performing
similar services;
o the affiliate charges us commissions consistent with those
charged to comparable unaffiliated customers for similar
transactions; and
o the affiliate's employment is consistent with the terms of the
current Investment Advisory and Services Agreement and federal
securities laws.
Directors and officers
IDSC's directors, chairman, president and controller are elected
annually for a term of one year. The other executive officers are
appointed by the president.
We paid a total of $______ during 1995 to directors not employed by
AEFC.
Board of Directors
David R. Hubers*
Born in 1943
Director since 1987
President and chief executive officer of AEFC since 1993. Senior
vice president and chief financial officer of AEFC from 1984 to
1993.
Charles W. Johnson
Born in 1929
Director since 1989
Former vice president and group executive, Industrial Systems, with
Honeywell Inc. Retired 1989.
Edward Landes
Born in 1919
Director since 1984
Development consultant. Former sales manager - Supplies Division
and district manager - Data Processing Division of IBM Corporation.
Retired 1983.<PAGE>
PAGE 59
John V. Luck, Ph.D.
Born in 1929
Director since 1987
Former senior vice president - Science and Technology with General
Mills, Inc. Employed with General Mills Inc. since 1970. Retired
1987.
James A. Mitchell*
Born in 1941
Director since 1994
Chairman of the board of directors since 1994. Executive vice
president - marketing and products of AEFC since 1994. Senior vice
president - insurance operations of AEFC and president and chief
executive officer of IDS Life Insurance Company from 1986 to 1994.
Harrison Randolph
Born in 1916
Director since 1968
Gordon H. Ritz
Born in 1926
Director since 1968
President, Con Rad Broadcasting Corp. Director, Sunstar Foods and
Mid-America Publishing.
Stuart A. Sedlacek*
Born in 1957
Director since 1994
President since 1994. Vice president - assured assets of AEFC
since 1994. Vice president and portfolio manager from 1988 to
1994. Executive vice president - assured assets of IDS Life
Insurance Company since 1994.
*"Interested Person" of IDSC as that term is defined in Investment
Company Act of 1940.
Executive officers
Stuart A. Sedlacek
Born in 1957
President since 1994
Morris Goodwin Jr.
Born in 1951
Vice president and treasurer since 1989.
Vice president and corporate treasurer of AEFC since 1989. Chief
financial officer and treasurer of American Express Trust Company
from 1988 to 1989.
<PAGE>
PAGE 60
Timothy S. Meehan
Born in 1957
Secretary since 1995
Secretary of AEFC and American Express Financial Advisors Inc.
since 1995. Senior counsel to AEFC since 1995. Counsel from 1990
to 1995.
Lorraine R. Hart
Born in 1951
Vice president-investments since 1994.
Vice President - insurance investments of AEFC since 1989. Vice
president, investments of IDS Life Insurance Company since 1992.
Jay C. Hatlestad
Born in 1957
Vice president and controller of IDS Certificate Company since
1994.
Manager of investment accounting of IDS Life Insurance Company from
1986 to 1994.
Bruce A. Kohn
Born in 1951
Vice president and general counsel since 1993.
Counsel to AEFC since 1992. Associate counsel from 1987 to 1992.
F. Dale Simmons
Born in 1937
Vice president - Real Estate Loan Management since 1993.
Vice president of AEFC since 1992. Senior portfolio manager of
AEFC since 1989. Assistant vice president from 1987 to 1992.
The officers and directors as a group beneficially own less than 1%
of the common stock of American Express Company.
IDSC has provisions in its bylaws relating to the indemnification
of its officers and directors against liability, as permitted by
law. Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers or
persons controlling the registrant pursuant to the foregoing
provisions, the registrant has been informed that in the opinion of
the SEC such indemnification is against public policy as expressed
in the Act and is therefore unenforceable.
Auditors
A firm of independent auditors audits our financial statements at
the close of each fiscal year (Dec. 31). Copies of our annual
financial statements (audited) and semiannual financial statements
(unaudited) are available to any certificate owner upon request.
<PAGE>
PAGE 61
Ernst & Young LLP, Minneapolis, has audited the financial
statements for each of the years in the three-year period ended
Dec. 31, 1995. These statements are included in this prospectus.
Ernst & Young LLP is also the auditor for American Express Company,
the parent company of AEFC and IDSC.
Other certificates issued by IDSC: Your American Express financial
advisor can give you more information on four other certificates
issued by IDSC. These certificates offer a wide range of
investment terms and features.
IDS Flexible Savings Certificate - A single payment certificate
that permits additional investments and on which IDSC guarantees
interest in advance for a term of 6, 12, 18, 24, 30 or 36 months.
IDS Future Value Certificate - A single payment certificate on
which IDSC guarantees interest in advance for four, five, six,
seven, eight, nine or ten-year maturity.
IDS Installment Certificate - An installment payment certificate on
which IDSC declares interest in advance for a three-month period
and offers bonuses in the third through sixth years for regular
investments.
IDS Stock Market Certificate - A single payment certificate that
calculates all or part of your interest based on stock market
performance, as measured by a broad market index, with IDSC's
guarantee of return of principal.<PAGE>
PAGE 62
(Back cover of prospectus)
Quick telephone reference
Certificate Service Organization/Transaction Line
Withdrawals, transfers, inquiries
National/Minnesota: 800-437-3133
Mpls./St. Paul area: 612-671-3800
TTY Service
For the hearing impaired
800-846-4293
American Express Financial Corporation Infoline
Current rate information (automated response, TouchtoneR phones
only)
National/Minnesota: 800-272-4445
Mpls./St. Paul area: 612-671-1630
Your American Express financial advisor:
IDS Cash Reserve Certificate
IDS Tower 10
Minneapolis, MN 55440-0010
<PAGE>
PAGE 63
PART I. CROSS REFERENCE SHEET FOR PROSPECTUS
PURSUANT TO RULE 404(c)
IDS INSTALLMENT CERTIFICATE
AND VARIATIONS
Item Caption in
Number Prospectus
Item 1. Forepart of the
Registration Statement
and Outside Front Cover
Page of Prospectus.
Item 2. Inside Front and Where to get information about
Outside Back Cover Pages IDSC; Table of Contents.
of Prospectus.
Item 3. Summary Informa- About the certificate
tion, Risk Factors
and Ratio of Earnings
to Fixed Charges.
Item 4. Use of Proceeds. How your money is used and
protected; Investment policies
Item 5. Determination of Not Applicable.
Offering Price.
Item 6. Dilution. Not Applicable.
Item 7. Selling Security Not Applicable.
Holders.
Item 8. Plan of How your certificate
Distribution. is managed.
Item 9. Description of About the Certificate;
Securities to Be How to invest and withdraw
Registered. funds.
Taxes on your earnings.
Item 10. Interests of Not Applicable.
Named Experts and Counsel.
<PAGE>
PAGE 64
PART I. CROSS REFERENCE SHEET FOR PROSPECTUS
PURSUANT TO RULE 404(c) (Continued)
Item Caption in
Number Prospectus
Item 11. Information with Invested and guaranteed by
Respect to the Registrant. IDSC; Regulated by government;
Relationship between IDSC and
American Express Financial
Corporation; Capital structure
and certificates issued;
Directors and Officers.
Item 12. Disclosure of Directors and Officers
Commission Position on
Indemnification for
Securities Act Liabilities.
<PAGE>
PAGE 65
IDS Installment Certificate
Prospectus
April 24, 1996
Earn attractive rates while you build your savings.
IDS Installment Certificates are issued by IDS Certificate Company
(IDSC). You can purchase this certificate with monthly investments
of at least $50 but not more than $5,000 (unless you receive prior
authorization from IDSC to invest more). Your principal is
guaranteed by IDSC. Your certificate earns interest, which is
declared every three months, guaranteed for a three-month period
and compounded monthly. In addition, you may receive bonus
interest payments if you make regular investments for specified
periods. Your certificate matures 10 years from its issue date.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION, NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
This certificate is backed by IDSC's investments on deposit rather
than guaranteed or insured by the government or someone else. See
"Invested and guaranteed by IDSC" and "Regulated by government"
under "How your money is used and protected."
This prospectus describes terms and conditions of your IDS
Installment Certificate. It contains facts that can help you
decide if the certificate is the right investment for you. Read
the prospectus before you invest and keep it for future reference.
No one has the authority to change the terms and conditions of the
IDS Installment Certificate as described in the prospectus, or to
bind IDSC by any statement not in it.
IDS Certificate Company
IDS Tower 10
Minneapolis, MN
55440-0010
1-800-437-3133 (toll free) or
(612) 671-3800 (Minneapolis/St. Paul area)
TTY numbers:
1-800-846-4293 (toll free) or
(612) 671-1630 (Minneapolis/St. Paul area)
<PAGE>
PAGE 66
Where to get information about IDSC
IDSC is subject to the reporting requirements of the Securities
Exchange Act of 1934. Reports and other information on IDSC are
filed with the Securities and Exchange Commission (SEC). Copies
can be obtained from the Public Reference Section of the SEC, 450
5th St., N.W., Washington, D.C., 20549, at prescribed rates. Or
you can inspect and copy information in person at the SEC's Public
Reference Section and at the following regional offices:
Northeast Regional Office
7 World Trade Center, Suite 1300
New York, NY 10048
Midwest Regional Office
Northwestern Atrium Center
500 West Madison St., Suite 1400
Chicago, IL 60611
Pacific Regional Office
5670 Wilshire Blvd., 11th Floor
Los Angeles, CA 90036
Initial interest rates
IDSC guarantees a fixed rate of interest for each three-month
period during the life of your certificate. The rate for your
first three months will be within a specified range of the average
rate for bank money market accounts published in the most recent
BANK RATE MONITOR Top 25 Market AverageTM, North Palm Beach, FL
33408, as explained under "About the certificate," below.
Here are the interest rates in effect on the date of this
prospectus, April 24, 1996:
Simple interest rate ____%
Effective annualized yield* ____%
* Assuming monthly compounding.
These rates may or may not be in effect when you apply to purchase
your certificate. Rates for later three-month periods are set at
the discretion of IDSC and may also differ from the rates shown
here.
We reserve the right to issue other securities with different
terms.
<PAGE>
PAGE 67
Contents
Table of contents
About the certificate
Investment amounts p
Face amount and principal p
Value at maturity p
Receiving cash during the term p
Interest p
Rates for new purchases p
Bonus payments p
Calculating your bonus p
How to invest and withdraw funds
Buying your certificate p
Full and partial withdrawals p
Transfers to other accounts p
Retirement plans: special policies p
Withdrawal at death p
Transfer of ownership p
For more information p
Taxes on your earnings
Retirement accounts p
Gifts to minors p
Foreign investors p
How your money is used and protected
Invested and guaranteed by IDSC p
Regulated by government p
Backed by our investments p
Investment policies p
How your money is managed
Relationship between IDSC and American
Express Financial Corporation p
Capital structure and certificates issued p
Investment management and services p
Distribution p
Employment of other American Express affiliates p
Directors and officers p
Auditors p
Annual financial information
Summary of selected financial information p
Management's discussion and analysis of
financial condition and results of operations p
Report of independent auditors p
Financial Statements p
Notes to financial statements p
<PAGE>
PAGE 68
About the certificate
Investment amounts
You may purchase the IDS Installment Certificate in scheduled
monthly installments of at least $50 but not more than $5,000
payable in U.S. currency. You may also make additional lump-sum
investments in any amount, as long as these investments plus your
scheduled payments over the life of the certificate do not total
more than $600,000.
The certificate may be used as an investment for your Individual
Retirement Account (IRA), 401(k) plan account or other qualified
retirement plan account. If so used, the amount of your
contribution (investment) will be subject to any limitations of the
plan and applicable federal law.
Face amount and principal
The face amount of your certificate is the total of your scheduled
monthly investments during its 10-year life. The minimum face
amount is $6,000, or the total of 120 monthly investments of $50
each. Your maximum face amount cannot exceed $600,000. Your
principal is the amount you actually invest over the life of the
certificate, less any withdrawals of your investments, and
penalties and fees. It is guaranteed by IDSC.
Value at maturity
Your certificate matures 10 years from its issue date. At
maturity, you will receive a check for the value of your
certificate which will be the total of your actual investments,
plus credited interest not paid to you in cash and any bonus
payments, less withdrawals, penalties and fees.
Receiving cash during the term
If you need your money before your certificate matures, you may
withdraw part or all of its value at any time, less any penalties
that apply. Procedures for withdrawing money, as well as
conditions under which penalties apply, are described in "Full and
partial withdrawals" under "How to invest and withdraw funds."
Interest
Your payments earn interest from the date they are credited to your
account. Interest is compounded and credited at the end of each
certificate month (on the monthly anniversary of the issue date).
IDSC declares and guarantees a fixed rate of interest for each
three-month period during the life of your certificate. We
calculate the amount of interest you earn each certificate month
by:<PAGE>
PAGE 69
o applying the interest rate then in effect to your balance
each day
o adding these daily amounts to get a monthly total
o subtracting interest accrued on any amount you withdraw
during the certificate month.
Interest is calculated on a 30-day month and 360-day year basis.
Rates for new purchases
When your application is accepted, and we received your initial
investment, we will send you a confirmation showing the rate that
your investment will earn for the first three-month period. IDSC
guarantees that this rate will be within a range from 25 basis
points (0.25%) below to 75 basis points (0.75%) above the average
interest rate for bank money market deposit accounts then published
in the BANK RATE MONITOR Top 25 Market AverageTM (the BRM Average).
For example, if the average rate most recently published is 2.75%,
our rate in effect for that week would be between 2.50 and 3.50%.
(Bank money market deposit accounts are government insured.)
The BANK RATE MONITOR is a weekly magazine published in North Palm
Beach, FL, 33408, by Advertising News Service Inc., an independent
national news organization that collects and disseminates
information about bank products and interest rates. Advertising
News Service Inc. has no connection with IDSC, American Express
Financial Corporation (AEFC), or any of their affiliates.
The BRM Average is an index of rates and annual effective yields
offered on various length certificates of deposit by large banks
and thrifts in 25 metropolitan areas. The frequency of compounding
varies among the banks and thrifts. Certificates of deposit in the
BRM average are government insured fixed-rate time deposits.
The BANK RATE MONITOR may be available in your local library. To
obtain information on the current BRM Average rates, call the
Client Service Organization at the telephone numbers listed on the
back cover.
Rates for new purchases are reviewed and may change weekly.
Normally, the rate you receive will be the higher of:
o the rate in effect on the date of your application
o the rate in effect on the date your application is
accepted by IDSC.
However, if your application bears a date more than seven days
before its receipt by IDSC, the rate you receive will be the higher
of:
o the rate in effect on the date your application is
accepted by IDSC
o the rate in effect seven days prior to receipt.<PAGE>
PAGE 70
Active or retired American Express employees, IDSC directors,
American Express financial advisors, their immediate families and
any U.S. employee of any affiliated company of IDSC are guaranteed
an initial rate 75 basis points above the rate offered to the
general public, reflecting the lower distribution costs associated
with such sales.
Rates for future periods: Interest on your certificate for future
three-month periods may be greater or less than the rates you
receive during the first three months. In setting future interest
rates, a primary consideration will be the prevailing investment
climate, including bank money market deposit account average rates
as reflected in the BRM Average. Nevertheless, we have complete
discretion as to what interest shall be declared beyond the initial
three-month period. At least six days in advance of each three-
month period, we will send you notice of the rate that your
certificate will earn for that period. If the BRM Average is no
longer publicly available or feasible to use, IDSC may use another,
similar index as a guide for setting rates.
Promotions and pricing flexibility: From time to time, IDSC may
sponsor or participate in promotions involving one or more of the
certificates and their respective terms. For example, we may offer
different rates to new clients, to existing clients, or to
individuals who purchase or use products or services offered by
American Express Financial Advisors Inc. or its affiliates.
We also may offer different rates based on your amount invested,
maturity selected, geographic location and whether the certificate
is purchased for an IRA or a qualified retirement account.
These promotions will generally be for a specified period of time.
If we offer a promotion, rates will be within the range of rates
described under "Rates for new purchases," above.
Performance: From February 1990 through February 1995, IDSC
Installment certificate yields were generally higher than average
bank money market deposit accounts and Super Now accounts, as
measured by the BRM Average (prior to Jan. 13, 1993, yields were
measured by the BRM National IndexTM, an average of CD yields in 10
cities).
<PAGE>
PAGE 71
Yields from February 1991 through February 1996
____ IDS Installment Certificate
.... Money Market Deposit Account
**** Super Now Account
6%
4% Three lines comparing the yields for IDS Installment
Certificate against those of money market and Super Now
Accounts with Installment's yield generally above the other
two lines.
2%
91 92 93 94 95 96
* The graph compares past yields and should not be considered a
prediction of future performance. The Installment Certificate's
yields reflect its former policy, in effect through April 1992, of
compounding interest rates each calendar quarter. Monthly
compounding is reflected from May 1992 through February 1996.
Bonus payments
If you make regular investments over a period of 24 months or more,
IDSC will pay you a monthly bonus. Monthly payments must be made
during the certificate month to qualify for the bonus. Your bonus
will be a percentage of your weighted average monthly investment
(WAMI). This percentage will increase from year three through year
six if you continue to make regular investments:
Minimum Totaling at Over Monthly
number of least this this bonus
monthly minimum time during Percentage
investments amount period period of WAMI*
20 $1,200 years 1-2 year 3 5%
additional 10 600 year 3 year 4 8%
additional 10 600 year 4 year 5 10%
additional 10 600 year 5 year 6 20%
* calculated from issue through the last month of the preceding
period
Bonus payments are credited to your account at the end of each
certificate month. They immediately become part of your balance
and begin to earn interest.
The illustrations below show the cumulative effect of bonus
payments on a hypothetical investment. Suppose you invest $100 per
month, receive interest at a constant rate of 3.21% (an effective
annual yield of 3.25%, assuming a Jan. 1 purchase) and make no
additional lump-sum investments and no withdrawals. (The rate and
yield are for illustration only and may not be in effect when you
purchase your certificate.) Your interest, balance and average
annual yield would increase as follows:
<PAGE>
PAGE 72
Installment Certificate Example
$8,000 *** Amount Paid In
... Interest
--- Bonus
$6,000
$4,000
$2,000 Graph shows the effect of cumulative interest and
bonus earned on an account from zero through 72
months.
6 12 18 24 30 36 42 48 54 60 66 72
<TABLE><CAPTION>
Installment Certificate example
Without bonus Added by bonus Total with bonus
Cumulative Cumulative Balance Cumulative Cumulative Balance Average
investments interest on bonus interest annual
investment on bonus yield*
<S> <C> <C> <C> <C> <C> <C> <C>
1st year end $1,200.00 $ 21.07 $1,221.07 $ 0.00 $ 0.00 $1,221.07 3.25%
2nd year end 2,400.00 81.92 2,481.92 0.00 0.00 2,481.92 3.25
3rd year end 3,600.00 183.84 3,783.84 60.00 1.06 3,844.90 4.31
4th year end 4,800.00 328.18 5,128.18 156.00 4.73 5,288.91 4.79
5th year end 6,000.00 516.31 6,516.31 276.00 12.07 6,804.38 4.97
6th year end 7,200.00 749.66 7,949.66 516.00 25.67 8,491.33 5.42
</TABLE>
* Average from date of issue to end of year indicated.
Important: The increase in yield that you receive from bonus
payments may be more or less than in the example, depending upon
interest rates during the six years following issue of your
certificate. If actual interest rates are higher than in the
example, the effect of the bonus will be less. For example, at a
7.00% interest rate, bonus payments would raise the certificate's
average annual yield from issue through year six by 2.05%, compared
to 2.17% (5.42 - 3.25) in the example. If actual interest rates
are lower than in the example, the increase in the average annual
yield would be somewhat more than 2.17%.
Calculating your bonus
To determine your bonus we:
o first calculate your average monthly investment over the
life of your certificate, weighting it to reflect the
amount of time each dollar has been invested (your<PAGE>
PAGE 73
weighted average monthly investment). Money invested
early is given more weight than money invested later.
o then calculate your monthly bonus as a specified
percentage of your weighted average monthly investment .
Here is an example to illustrate the two calculations: Suppose you
make 24 consecutive monthly investments -- $100 per month for the
first six months and $150 per month thereafter (a total of $3300).
1. Calculate the weighted value of each month's investment.
Multiply the amount invested ($100) by the number of months it
is held - 24 months for the first $100, 23 months for the
second, etc. Example: Amount invested in month 1 is $100.
The investment will be held 24 months. $100 X 24 months =
$2,400 monthly weighted value.
Month Investment X Months held = Weighted value
1 $ 100 24 $ 2,400
2 100 23 2,300
3 100 22 2,200
4 100 21 2,100
5 100 20 2,000
6 100 19 1,900
7... 150 18... 2,700
24 150 1 150
SUM $3,300 300 $38,550
2. Add the weighted values: $2,400 + $2,300 + $2,200 + ...$150 =
$38,550 is the total weighted value of the investment.
3. Add the number of months held:
24 + 23 + 22 + ...+1 = 300. 300 is the total number of months
the investment is held.
4. Divide the sum of weighted values be the sum of months held:
$38,550 + 300 = $128.50 is your weighted average monthly
investment (WAMI) at the end of 24 months.
5. Multiply your WAMI by the applicable by the applicable bonus
percentage (5% in the third year): 5% of $128.50 = $6.43 is
your bonus payment each month in year 3, a total of $77 for
the year.
This procedure is repeated in months 36, 48 and 60 to calculate
your weighted average monthly investment from issue through years
three, four and five, respectively. These weighted averages are
then multiplied by the applicable percentages -- 8%, 10% and 20% --
to determine monthly bonus payments for years 4, 5 and 6,
respectively.
<PAGE>
PAGE 74
Effect of partial withdrawals: If you withdraw part of your
principal, you will not receive credit toward a bonus for the
sum(s) you withdraw. In effect, you reduce the size of the bonus
you are eligible to receive. This is because removing principal
will reduce the weighted value of your investment. The weighted
value will decrease in proportion to the amount of principal you
withdraw. Using the example above, if you withdrew $1000 of the
principal before the end of the 24th month, your total investment
would decrease by 30.3% ($1000/3300=.303); therefore the reduction
factor you will use to figure out the amount of your reduced bonus
is .303.
To figure out how much your bonus will be, follow these steps:
1. Multiply the original total weighted value (see original
example) of your investment be the reduction factor calculated
above.
$38550 x .303 = $11680.65.
2 Subtract the number calculated in Step 1 from the original
total weighted value of your investment.
$38550 - 11680.65 = $26869.35.
3. Divide the new weighted value of your investment by the total
number of months held (300 in this example).
$26869/300 = $89.56.
Your new weighted average monthly investment (WAMI) is $89.56.
4. Multiply the new WAMI by the applicable bonus percentage. In
this example, 5% is the bonus because that is the amount on
the third year bonus.
$89.56 x .05 = $4.48, or $53.76 total bonus for the year.
Withdrawals may also affect your eligibility for bonus payments in
the third through sixth years. To remain eligible you must make
the required number of minimum payments and maintain a balance at
least equal to the amount you would have accumulated if you had
invested the required minimum of $600 per year. You will become
ineligible if withdrawals reduce your balance below this level.
Other eligibility policies: If you have not made the required
regular investments specified earlier, you may not receive bonus
payments in the year bonuses would normally be paid. But you may
become eligible during the next bonus period by making the required
investments in the next year. For example, assume that you make
the required investments for the first 24 months and receive bonus
payments in the third year. But during the third year, you make
only three monthly investments. In that case, you would not
receive the bonus payments that would normally be made in the
fourth year. However, if you make all your regular monthly
investments in the fourth year, and your account principal balance
reaches the required equivalent of 48 investments of $50 per month
($2,400 at the end of the fourth year), then you would qualify for
bonus payments in year five, based on the new weighted average
monthly investment.
<PAGE>
PAGE 75
Interest rate from years seven through 10: From year seven until
your certificate matures, you will receive interest rates
comparable to a one-year fixed-rate investment. A rate will be
declared during the 72nd month and guaranteed for a three-month
period starting in the 73rd month. Thereafter, the rate will be
declared every three months and guaranteed for three-month periods.
How to invest and withdraw funds
Buying your certificate
Your American Express financial advisor will help you fill out and
submit an application to open an account with us and purchase a
certificate. We will process the application at our corporate
offices in Minneapolis. When your application is accepted and we
have received your initial investment, we will send you a
confirmation of your purchase, indicating your account number and
showing the rate of interest for your first three months, as
described under "Rates for new purchases," above.
See "Purchase policies" below.
Important: When opening an account, you must provide IDSC with your
correct Taxpayer Identification Number (Social Security or Employer
Identification Number). See "Taxes on your earnings."
Once your account is set up, there are several convenient ways to
make monthly investments.
Purchase policies:
o Investments must be received and accepted in the Minneapolis
headquarters on a business day before 3 p.m. Central time to
be included in your account that day. Otherwise your purchase
will be processed the next business day.
o You have 15 days from the date of purchase to cancel your
investment without penalty by either writing or calling the
Client Service Organization at the address or phone number on
the back of this prospectus. If you decide to cancel your
certificate within this 15-day period, you will not earn any
interest.
o If you purchase a certificate with a personal check or other
non-guaranteed funds, AEFC will wait one day for the process
of converting your check to federal funds (e.g., monies of
member banks within the Federal Reserve Bank) before your
purchase will be accepted and you begin earning interest.
o IDSC has the authority to determine whether to accept an
application and sell a certificate.
o If you make no investments for a period of at least 12
consecutive months and your principal is less than $100, we
may send you a notice of our intent to cancel the certificate.
After the notice, if an investment is not made within 60 days,
your certificate will be canceled, and we will send you a
check for its full value.<PAGE>
PAGE 76
A number of special policies apply to purchases, withdrawals and
exchanges within IRAs, 401(k) plans and other qualified retirement
plans. See "Retirement plans: special policies."
Two ways to make monthly investments
<TABLE><CAPTION>
<S> <C> <C>
1 Contact your financial advisor To cancel a bank
By scheduled to set up one of the following authorization, you must
investment scheduled plans: instruct IDSC in
plan writing or over the phone.
We must receive notice at
- bank authorization (automatic least three business
deduction from your bank days before the date
account) funds would normally
be withdrawn
- automatic payroll deduction from your bank account.
Bank authorizations will
- direct deposit of Social automatically be stopped
Security check at maturity or full
withdrawal.
- other plan approved by
IDSC
2
By mail
Send your check along with your name and account number to:
Regular mail: Express mail:
American Express Financial American Express Financial
Advisors Inc. Advisors Inc.
Client Service Organization Client Service Organization
IDS Tower 10 733 Marquette Ave.
Minneapolis, MN 55440-0010 Minneapolis, MN 55402
</TABLE>
Full and partial withdrawals
You may withdraw your certificate for its full value or make a
partial withdrawal of $100 or more at any time. However:
o If your withdrawal request is received in the Minneapolis
headquarters on a business day before 3 p.m. Central
time, it will be processed that day and payment will be
sent the next business day. Otherwise, your request will
be processed one business day later.
o Full and partial withdrawals of principal in the first
three years are subject to penalties, described below.
o You may not make a partial withdrawal if it would reduce
your certificate balance to less than $250. If you
request such a withdrawal, we will contact you for
revised instructions.
o As noted earlier, withdrawals during the first six years
will affect the amount of your bonus payments and may
make you ineligible for a bonus. See "Bonus payments."<PAGE>
PAGE 77
Penalties for early withdrawal: If you withdraw money within three
years after the certificate was purchased, you will pay a penalty
of 2% of the principal withdrawn. (The 2% penalty is waived upon
death of the certificate owner, or if it is for an IRA and you have
reached age 70 1/2. See "Retirement plans: special policies"
below for additional penalty policies.)
When you request a full or partial withdrawal, we pay the amount
you request:
o first from interest and bonus payments credited to your
account
o then from the principal of your certificate.
For example, suppose this is your balance at the end of the second
year:
Total investments $7,200.00
Interest and bonus credited $488.61
Total balance $7,688.61
If you request a $1,000 check, we would withdraw funds in this
order:
Credited interest and bonus $ 488.61
Withdrawal of principal $ 511.39
Total requested withdrawal $1,000.00
In addition, we would have to withdraw funds to cover the full
withdrawal penalty:
Principal withdrawn $511.39
Withdrawal penalty % 2%
Withdrawal penalty $ 10.23
The total transaction would be:
Beginning balance $7,688.61
Credited interest and bonus withdrawn ($488.61)
Principal withdrawn ($511.39)
Withdrawal penalty (also from principal) ($10.23)
Remaining balance $6,678.38
Loss of Interest: If you make a withdrawal at any time other than
the last day of the certificate month, you will lose interest
accrued on the withdrawal amount since the end of the last
certificate month.
Other full and partial withdrawal policies:
o If you request a partial or full withdrawal of a certificate
recently purchased or added to by a check or money order that
is not guaranteed, we will wait for your check to clear.
Please expect a minimum of 10 days from the date of purchase <PAGE>
PAGE 78
before IDSC mails a check to you. (A check may be mailed
earlier if the bank provides evidence that your check has
cleared.)
o If your certificate is pledged as collateral, any withdrawal
will be delayed until we get approval from the secured party.
o Any payments to you may be delayed under applicable rules,
regulations or orders of the SEC.
Transfers to other accounts
You may transfer part or all of your certificate to any other IDSC
certificate or into another existing American Express Financial
Advisors Inc. account that has the same ownership (subject to any
terms and conditions that may apply).
Two ways to request a withdrawal or transfer
1
By phone
o Call the Client Service Organization at the telephone numbers
listed on the back cover between 8 a.m. and 6 p.m. your local
time.
o Maximum phone request: $50,000
o Transferring into an American Express Financial Advisors Inc.
account with the same ownership.
o A telephone withdrawal request will not be allowed within 30
days of a phoned-in address change.
o We will honor any telephone request believed to be authentic
and will use reasonable procedures to confirm that they are.
This includes asking identifying questions and tape recording
telephone calls. So long as reasonable procedures are
followed, neither IDSC nor AEFC will be liable for any loss
resulting from fraudulent requests.
You may request that telephone withdrawals not be authorized from
your account by writing the Client Service Organization.
2
By mail
Written requests are required for:
o Transactions over $50,000.
o Pension plans and custodial accounts where the minor has
reached the age at which custodianship should terminate.
o Transfers to another American Express Financial Advisors
Inc. account with different ownership. (All current
registered owners must sign the request.)
<PAGE>
PAGE 79
Send your name, account number and request for a withdrawal or
transfer to:
Regular mail:
American Express Financial Advisors Inc.
Client Service Organization
IDS Tower 10
Minneapolis, MN
55440-0010
Express mail:
American Express Financial Advisors Inc.
Client Service Organization
733 Marquette Ave.
Minneapolis, MN 55402
Three ways to receive payment when you withdraw funds
1
By regular or
express mail
o Mailed to address on record; please allow seven days for
mailing
o Payable to name(s) you requested
o For express mail, you will pay charges that vary
depending on the courier you select. Cost for partial
withdrawals is deducted from the remaining balance, or
from the proceeds for full withdrawals.
2
By wire
o Minimum wire withdrawal: $1,000
o Request that money be wired to your bank.
o Bank account must be in same ownership as American
Express Financial Advisors Inc. account.
o Pre-authorization required. Complete the bank wire
authorization section in the application or use a form
supplied by your American Express financial advisor. All
registered owners must sign.
o A service fee, if any, may be deducted from your balance
(for partial withdrawals) or from the proceeds of a full
withdrawal.
3
By electronic transfer
o Available only for preauthorized scheduled partial
withdrawals and other full or partial withdrawals
<PAGE>
PAGE 80
o No charge
o Deposited electronically in your bank account
o Allow two to five business days from request to deposit
Retirement plans: special policies
o If the certificate is purchased for a 401(k) plan or other
qualified retirement plan account, the terms and conditions of
the certificate apply to the plan as the owner of this
certificate. However, the terms of the plan, as interpreted
by the plan trustee or administrator, will determine how a
participant's individual account under the plan is
administered. These terms may differ from the terms of the
certificate.
o The annual custodial fee for IRA or non-401(k) qualified
retirement plans may be deducted from your certificate
account. It may reduce the amount payable at maturity or the
amount received upon an early withdrawal.
o If your certificate is held in a Custodial Retirement Plan (or
Keogh plan), special rules may apply at maturity. If no other
investment instructions are provided directing how to handle
your certificate at maturity, full value of the certificate
will automatically transfer to a new or existing cash
management account according to the rules outlined in the
Custodial Retirement Plan document.
o Retirement plan withdrawals may be subject to withdrawal
penalties or loss of interest even if they are not subject to
federal tax penalties.
o We will waive withdrawal charges on withdrawals for IRA
accounts of clients who have reached age 70 1/2.
o If you withdraw all funds from your last account in an IRA
plan, a $25 termination fee will apply.
o The IRA termination fee will be waived if withdrawal occurs
upon the owner's death.
Withdrawal at death
If a certificate is surrendered upon the client's death, any
applicable surrender charge will be waived. In addition, if an IRA
termination fee is applicable, it will also be waived.
Transfer of ownership
While the certificate is not negotiable, IDSC will transfer
ownership upon written notification to our Client Service
Organization. However, if you have purchased your certificate for
an IRA, 401(k) plan or other qualified retirement plan, you may be
unable to transfer or assign the certificate without losing the
account's favorable tax status. Please consult your tax advisor.
<PAGE>
PAGE 81
For more information
For information on purchases, withdrawals, exchanges, transfers of
ownership, proper instructions and other service questions
regarding your certificate, please consult your American Express
financial advisor or call the Client Service Organization at the
telephone numbers listed on the back cover.
Taxes on your earnings
The bonus payments and interest on your certificate, including
interest on bonus payments, are taxable when credited to your
account. Each calendar year we provide the certificate account
owners and the IRS with reports of all earnings over $10 (Form
1099). Withdrawals are reported to the certificate account owner
and the IRS on Form 1099-B, Proceeds from Broker Transactions.
Retirement accounts
If you are using the certificate as an investment for an IRA,
401(k) plan account or other qualified retirement plan account,
income tax rules for your IRA or qualified plan apply. Generally,
you will pay no income taxes on your investment's earnings -- and,
in many cases, on part or all of the investment itself -- until you
begin to make withdrawals.
IDSC will withhold federal income taxes of 10% on IRA withdrawals
unless you tell us not to. IDSC is required to withhold federal
income taxes of 20% on most other qualified plan distributions,
unless the distribution is directly rolled over to another
qualified plan or IRA.
Withdrawals from retirement accounts are generally subject to a
penalty tax of 10% by the IRS if you make them before age 59-1/2,
unless you are disabled or if they are made by your beneficiary in
the event of your death. (Other exceptions also may apply.)
Consult your tax advisor to see how these rules apply to you before
you request a distribution from your plan or IRA.
Gifts to minors
The certificate may be given to a minor under either the Uniform
Gifts or Uniform Transfers to Minors Act (UGMA/UTMA), whichever
applies in your state. UGMAs/ UTMAs are irrevocable. Generally,
under federal tax laws, income over $1,200 on property owned by
children under age 14 will be taxed at the parents' marginal tax
rate, while income on property owned by children 14 or older will
be taxed at the child's rate.
Your Taxpayer Identification Number (TIN) and backup withholding:
As with any financial account you open, you must list your current
and correct Taxpayer Identification Number (TIN) -- either your
Social Security or Employer Identification Number. The TIN must be
certified under penalties of perjury on your application when you
open an account with IDSC.
<PAGE>
PAGE 82
If you don't provide the TIN to IDSC, or the TIN you report is
incorrect, you could be subject to backup withholding of 31% of
your interest earnings. You could also be subject to further
penalties, such as:
o a $50 penalty for each failure to supply your correct TIN
o a civil penalty of $500 if you make a false statement
that results in no backup withholding
o criminal penalties for falsifying information.
You could also be subject to backup withholding because you failed
to report interest on your tax return as required.
To help you determine the correct TIN to use on various types of
accounts, please use this chart:
How to determine the correct TIN
For this type of account:
Individual or joint account
Custodian account of a minor
(Uniform Gifts/Transfers
to Minors Act)
A living trust
An irrevocable trust,
pension trust or estate
Sole proprietorship
or partnership
Corporate
Association, club or
tax-exempt organization
Use the Social Security or
Employer Identification Number of:
The individual or first person listed on the account
The minor
The grantor-trustee
(the person who puts the money into the trust)
The legal entity
(not the personal representative or trustee, unless no legal entity
is designated in the account title)
The owner or partnership
The corporation<PAGE>
PAGE 83
The organization
For details on TIN requirements, ask your American Express
financial advisor or local American Express Financial Advisors
office for Federal Form W-9, Request for Taxpayer Identification
Number and Certification.
Foreign investors
If you are not a citizen or resident of the United States, you must
supply IDSC with Form W-8, Certificate of Foreign Status when you
purchase your certificate, and you must resupply it every three
years. You must also supply both a current mailing address and an
address of foreign residency, if different. IDSC will not accept
purchases of certificates by nonresident aliens without an
appropriately certified Form W-8 (or approved substitute). Also,
if you do not supply Form W-8 you will be subject to backup
withholding on interest payments and withdrawals.
Interest on the certificate is "portfolio interest" as defined in
U.S. Internal Revenue Code Section 871(h) if earned by a
nonresident alien. Even though your interest income is not taxed
by the U.S. government, it will be reported at year end to you and
to the U.S. government on a Form 1042S, Foreign Person's U.S.
Source Income Subject to Withholding. The United States
participates in various tax treaties with foreign countries, which
provide for sharing of tax information.
Estate tax: If you are a nonresident alien and you die while
owning a certificate, IDSC will need a statement from persons IDSC
believes are knowledgeable about your estate. The statement must
be in a form satisfactory to IDSC and must tell us that, on your
date of death, your estate did not include any property in the
United States for U.S. estate tax purposes. If we do not receive
the statement, we generally will not take action regarding your
certificate until we receive a transfer certificate from the IRS
or satisfactory evidence that the estate is being administered by
an executor or administrator appointed, qualified and acting within
the United States. In general, a transfer certificate provides
assurance that the IRS will not claim your IDS certificate to
satisfy estate taxes.
Important: This information is a brief and selective summary of
certain federal tax rules that apply to this certificate. Tax
matters are highly individual and complex, and you should consult a
qualified tax adviser about your personal situation.
How your money is used and protected
Invested and guaranteed by IDSC
The IDS Installment Certificate is issued and guaranteed by IDSC, a
wholly owned subsidiary of AEFC. We are by far the largest issuer
of face amount certificates in the United States, with total assets
of more than $___ billion and a net worth in excess of $___ million
on Dec. 31, 1995.
<PAGE>
PAGE 84
We back our certificates by investing the money received and
keeping the invested assets on deposit. Our investments generate
interest and dividends, out of which we pay:
o interest to certificate owners
o various expenses, including taxes, fees to AEFC for
advisory and other services and distribution fees to
American Express Financial Advisors Inc.
For a review of significant events relating to our business, see
"Management's discussion and analysis of financial condition and
results of operations." Our certificates are not rated by a
national rating agency.
Most banks and thrifts offer investments known as certificates of
deposit (CDs) that are similar to our certificates in many ways.
Early withdrawal of bank CDs often results in penalties. Banks and
thrifts generally have federal deposit insurance for their deposits
and lend much of the money you deposit to individuals, businesses
and other enterprises. Other financial institutions may offer
investments with comparable combinations of safety and return on
investment.
Regulated by government
Because the IDS Installment Certificate is a security, its offer
and sale are subject to regulation under federal and state
securities laws. (It is a face-amount certificate -- not a bank
product, an equity investment, a form of life insurance or an
investment trust.)
The federal Investment Company Act of 1940 requires us to keep
investments on deposit in a segregated custodial account to protect
all of our outstanding certificates. These investments back the
entire value of your certificate account. Their amortized cost
must exceed the required carrying value of the outstanding
certificates by at least $250,000. As of Dec. 31, 1995, the
amortized cost of these investments exceeded the required carrying
value of our outstanding certificates by more than $___ million.
Backed by our investments
Our investments are varied and of high quality. This was the
composition of our portfolio as of Dec. 31, 1995:
Type of investment Net amount invested
Corporate and other bonds 31%
Government agency bonds 27
Preferred stocks 23
Mortgages 9
Municipal bonds 5
Cash and cash equivalents 5
More than 95% of our securities portfolio (bonds and preferred
stocks) are rated investment grade. For additional information <PAGE>
PAGE 85
regarding securities ratings, please refer to Note 3B in the
financial statements.
Most of our investments are on deposit with American Express Trust
Company (formerly IDS Trust Company), Minneapolis, although we also
maintain separate deposits as required by certain states. American
Express Trust Company is a wholly owned subsidiary of AEFC. Copies
of our Dec. 31, 1995, schedule of Investments in Securities of
Unaffiliated Issuers are available upon request. For comments
regarding the valuation, carrying values and unrealized
appreciation (depreciation) of investment securities, see Notes 1,
2 and 3 to the financial statements.
Investment policies
In deciding how to diversify the portfolio -- among what types of
investments in what amounts -- the officers and directors of IDSC
use their best judgment, subject to applicable law. The following
policies currently govern our investment decisions:
Purchasing securities on margin: We will not purchase any
securities on margin or participate on a joint basis or a joint-
and-several basis in any trading account in securities.
Commodities: We have not and do not intend to purchase or sell
commodities or commodity contracts.
Underwriting: We do not intend to engage in the public distribution
of securities issued by others. However, if we purchase
unregistered securities and later resell them, we may be considered
an underwriter under federal securities laws.
Borrowing money: From time to time we have established a line of
credit if management believed borrowing was necessary or desirable.
While a line of credit does not currently exist, it may be
established again in the future. We may pledge some of our assets
as security. We may occasionally use repurchase agreements as a
way to borrow money. Under these agreements, we sell debt
securities to our lender, and repurchase them at the sales price
plus an agreed-upon interest rate within a specified period of
time.
Real estate: We may invest directly in real estate, though we have
not generally done so in the past. We do invest in mortgage loans.
Lending securities: We may lend some of our securities to broker-
dealers and receive cash equal to the market value of the
securities as collateral. We invest this cash in short-term
securities. If the market value of the securities goes up, the
borrower pays us additional cash. During the course of the loan,
the borrower makes cash payments to us equal to all interest,
dividends and other distributions paid on the loaned securities.
We will try to vote these securities if a major event affecting our
investment is under consideration.
<PAGE>
PAGE 86
When-issued securities: Most of our investments are in debt
securities, some of which are purchased on a when-issued basis. It
may take as long as 45 days or more before these securities are
issued and delivered to us. We generally do not pay for these
securities or start earning on them until delivery. We have
established procedures to ensure that sufficient cash is available
to meet when-issued commitments.
Financial transactions: We buy or sell various types of options
contracts for hedging purposes or as a trading technique to
facilitate securities purchases or sales. We buy interest rate
caps for hedging purposes. These pay us a return if interest rates
rise above a specified level. IDSC may enter into other financial
transactions, including futures and other derivatives, for the
purpose of managing the interest rate exposures associated with
IDSC's assets or liabilities. Derivatives are financial
instruments whose performance is derived, at least in part, from
the performance of an underlying asset, security or index. A small
change in the value of the underlying asset, security or index may
cause a sizable gain or loss in the fair value of the derivative.
Illiquid securities: A security is illiquid if it cannot be sold
in the normal course of business within seven days at approximately
its current market value. Some investments cannot be resold to the
U.S. public because of their terms or government regulations. All
securities, however can be sold in private sales, and many may be
sold to other institutions and qualified buyers or on foreign
markets. IDSC's investment advisor will follow guidelines
established by the board and consider relevant factors such as the
nature of the security and the number of likely buyers when
determining whether a security is illiquid. No more than 15% of
IDSC's investment portfolio will be held in securities that are
illiquid. In valuing its investment portfolio to determine this
15% limit, IDSC will use statutory accounting. This means that,
for this purpose, the portfolio will be valued in accordance with
applicable investment statutes rather than generally accepted
accounting principles.
Restrictions: There are no restrictions on concentration of
investments in any particular industry or group of industries or on
rates of portfolio turnover.
How your money is managed
Relationship between IDSC and AEFC
IDSC was originally organized as Investors Syndicate of America,
Inc., a Minnesota corporation, on Oct. 15, 1940, and began business
as an issuer of face amount investment certificates on Jan. 1,
1941. The company became a Delaware corporation on Dec. 31, 1977,
and changed its name to IDS Certificate Company on April 2, 1984.
Before IDSC was created, AEFC (formerly known as IDS Financial
Corporation) our parent company and organizer, had issued similar
certificates since 1894. As of Jan. 1, 1995, IDS Financial
Corporation changed its name to AEFC. IDSC, IDS, and now AEFC have
ever failed to meet their certificate payments.<PAGE>
PAGE 87
During its many years in operation, AEFC has become a leading
manager of investments in mortgages and securities. As of Dec. 31,
1995, AEFC managed investments, including its own, of more than
$___ billion. American Express Financial Advisors Inc., a wholly
owned subsidiary of AEFC, provides a broad range of financial
planning services for individuals and businesses through its
nationwide network of more than ___ offices and more than ____
financial advisors. AEFC's financial planning services are
comprehensive, beginning with a detailed written analysis that's
tailored to your needs. Your analysis may address one or all of
these six essential areas: financial position, protection
planning, investment planning, income tax planning, retirement
planning and estate planning.
AEFC itself is a wholly owned subsidiary of American Express
Company, a financial services company with executive offices at
American Express Tower, World Financial Center, New York, NY 10285.
American Express Company is a financial services company engaged
through subsidiaries in other business including:
o travel related services (including American ExpressR Card and
Travelers Cheque operations through American Express Travel
Related Services Company, Inc. and its subsidiaries), and
o international banking services (through American Express Bank
Ltd. and its subsidiaries).
American Express Financial Advisors Inc. is not a bank, and the
securities offered by it, such as face amount certificates issued
by IDSC, are not backed or guaranteed by any bank, nor are they
insured by the FDIC.
Capital structure and certificates issued
AEFC has authorized, issued and has outstanding 150,000 shares of
common stock, par value of $10 per share. American Express Company
owns all of the outstanding shares.
As of Dec. 31, 1995, IDSC had issued (in face amount)
$12,727,756,065 of installment certificates and $13,016,532,575 of
single payment certificates.
Investment management and services
Under an Investment Advisory and Services Agreement, AEFC acts as
our investment advisor and is responsible for:
o providing investment research,
o making specific investment recommendations
o executing purchase and sale orders according to our
policy of obtaining the best price and execution.
All these activities are subject to direction and control by our
board of directors and officers. Our agreement with AEFC requires <PAGE>
PAGE 88
annual renewal by our board, including a majority of directors who
are not interested persons of American Express Financial Advisors
Inc. or IDSC as defined in the federal Investment Company Act of
1940.
For its services, we pay AEFC a monthly fee, equal on an annual
basis to a percentage of the total book value of certain assets
(included assets).
Advisory and services fee computation:
Included assets Percentage of total book value
First $250 million 0.75%
Next 250 million 0.65
Next 250 million 0.55
Next 250 million 0.50
Any amount over $1 billion 0.45
Included assets are all assets of IDSC except mortgage loans, real
estate, and any other asset on which we pay a service fee.
Advisory and services fees for past three years:
Percentage of
Year Total fees included assets
1995 $ %
1994 $13,565,432 0.51
1993 $15,036,091 0.50
Estimated advisory and services fees for 1995 are $15,074,000.
Other expenses payable by IDSC: The Investment Advisory and
Services Agreement provides that we will pay:
o costs incurred by us in connection with real estate and
mortgages,
o taxes,
o depository and custodian fees,
o brokerage commissions,
o fees and expenses for services not covered by other agreements
and provided to us at our request, or by requirement, by
attorneys, auditors, examiners and professional consultants
who are not officers or employees of AEFC,
o fees and expenses of our directors who are not officers or
employees of AEFC,
o provision for certificate reserves (interest accrued on
certificate owner accounts), and
<PAGE>
PAGE 89
o expenses of customer settlements not attributable to sales
function.
Distribution
Under a Distribution Agreement with American Express Financial
Advisors Inc., we pay for the distribution of this certificate as
follows:
o 6% of the first 60 monthly scheduled payments, or the
equivalent, received during the first five years after the
issue date of the certificate; and
o 0.5 % of the average daily certificate balance during the
sixth through the 10th year.
This fee is not assessed to your certificate account.
Total distribution fees paid to American Express Financial Advisors
Inc. for all series of certificates amounted to $34,534,747 during
the year ended Dec. 31, 1995. We expect to pay American Express
Financial Advisors Inc. distribution fees amounting to $33,700,000
during 1996.
See Note 1 to Financial Statements regarding deferral of
distribution fee expense.
American Express Financial Advisors Inc. pays commissions to its
financial advisors and pays other selling expenses in connection
with services to us. Our board of directors, including a majority
of directors who are not interested persons of American Express
Financial Advisors Inc. or IDSC, approved this distribution
agreement.
Employment of other American Express affiliates
AEFC may employ an affiliate of American Express Company as
executing broker for our portfolio transactions only if:
o we receive prices and executions at least as favorable as
those offered by qualified independent brokers performing
similar services;
o the affiliate charges us commissions consistent with those
charged to comparable unaffiliated customers for similar
transactions; and
o the affiliate's employment is consistent with the terms of the
current Investment Advisory and Services Agreement and federal
securities laws.
Directors and officers
IDSC's directors, chairman, president and controller are elected
annually for a term of one year. The other executive officers are
appointed by the president.
<PAGE>
PAGE 90
We paid a total of $______ during 1995 to directors not employed by
AEFC.
Board of directors
David R. Hubers*
Born in 1943
Director since 1987
President and chief executive officer of AEFC since 1993. Senior
vice president and chief financial officer of AEFC from 1984 to
1993.
Charles W. Johnson
Born in 1929
Director since 1989
Former vice president and group executive, Industrial Systems, with
Honeywell Inc. Retired 1989.
Edward Landes
Born in 1919
Director since 1984
Development consultant. Former sales manager - Supplies Division
and district manager - Data Processing Division of IBM Corporation.
Retired 1983.
John V. Luck, Ph.D.
Born in 1926
Director since 1987
Former senior vice president - Science and Technology with General
Mills, Inc. Employed with General Mills Inc. since 1970. Retired
1987.
James A. Mitchell*
Born in 1941
Director since 1994
Chairman of the board of directors since 1994. Executive vice
president - marketing and products of AEFC since February 1994.
Senior vice president - insurance operations of AEFC and president
and chief executive officer of IDS Life Insurance Company from 1986
to 1994.
Harrison Randolph
Born in 1916
Director since 1968
Gordon H. Ritz
Born in 1926
Director since 1968
President, Con Rad Broadcasting Corp. Director, Sunstar Foods and
Mid-America Publishing.
<PAGE>
PAGE 91
Stuart A. Sedlacek*
Born in 1957
Director since 1994
President since 1994. Vice president - assured assets of AEFC
since 1994. Vice president and portfolio manager from 1988 to
1994. Executive vice president - assured assets of IDS Life
Insurance Company since 1994.
*"Interested Person" of IDSC as that term is defined in Investment
Company Act of 1940.
Executive officers
Stuart A. Sedlacek
Born in 1957
President since 1994
Morris Goodwin Jr.
Born in 1951
Vice president and treasurer since 1989
Vice president and corporate treasurer of AEFC since 1989. Chief
financial officer and treasurer of American Express Trust Company
from 1988 to 1989.
Timothy S. Meehan
Born in 1957
Secretary since 1995
Secretary of AEFC and American Express Financial Advisors Inc.
since 1995. Senior counsel to AEFC since 1995. Counsel from 1990
to 1995.
Lorraine R. Hart
Born in 1951
Vice president-investments since 1994
Vice President - insurance investments of AEFC since 1989. Vice
president, investments of IDS Life Insurance Company since 1992.
Jay C. Hatlestad
Born in 1957
Vice president and controller of IDS Certificate Company since
1994.
Manager of investment accounting of IDS Life Insurance Company from
1986 to 1994.
Bruce A. Kohn
Born in 1951
Vice president and general counsel since 1993
Counsel to AEFC since 1992. Associate counsel from 1987 to 1992.
<PAGE>
PAGE 92
F. Dale Simmons
Born in 1937
Vice president - Real Estate Loan Management since 1993
Vice president of AEFC since 1992. Senior portfolio manager of
AEFC since 1989. Assistant vice president from 1987 to 1992.
The officers and directors as a group beneficially own less than 1%
of the common stock of American Express Company.
IDSC has provisions in its bylaws relating to the indemnification
of its officers and directors against liability, as permitted by
law. Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers or
persons controlling the registrant pursuant to the foregoing
provisions, the registrant has been informed that in the opinion of
the SEC such indemnification is against public policy as expressed
in the Act and is therefore unenforceable.
Auditors
A firm of independent auditors audits our financial statements at
the close of each fiscal year (Dec. 31). Copies of our annual
financial statements (audited) and semiannual financial statements
(unaudited) are available to any certificate owner upon request.
Ernst & Young LLP, Minneapolis, has audited the financial
statements for each of the years in the three-year period ended
Dec. 31, 1995. These statements are included in this prospectus.
Ernst & Young LLP is also the auditor for American Express Company,
the parent company of AEFC and IDSC.
Other certificates issued by IDSC: Your American Express financial
advisor can give you more information on four other certificates
issued by IDSC. These certificates offer a wide range of
investment terms and features.
IDS Cash Reserve Certificate - A single payment certificate that
permits additional investments on which IDSC guarantees interest in
advance for a three-month term.
IDS Flexible Savings Certificate - A single payment certificate
that permits additional investments on which IDSC guarantees
interest in advance for a term of 6, 12, 18, 24, 30 or 36 months.
IDS Future Value Certificate - A single payment certificate on
which IDSC guarantees interest in advance for four, five, six,
seven, eight, nine or ten-year maturity.
IDS Stock Market Certificate - A single payment certificate that
calculates all or part of your interest based on stock market
performance, as measured by a broad market index, with IDSC's
guarantee of return of principal.
<PAGE>
PAGE 93
(Back cover of prospectus)
Quick telephone reference
Client Service Organization/Transaction Line
Withdrawals, transfers, inquiries
National/Minnesota: 800-437-3133
Mpls./St. Paul area: 612-671-3800
TTY Service
For the hearing impaired
800-846-4293
American Express Financial Corporation Infoline
Current rate information (automated response, TouchtoneR phones
only)
National/Minnesota: 800-272-4445
Mpls./St. Paul area: 612-671-1630
Your American Express financial advisor:
IDS Installment Certificate
IDS Tower 10
Minneapolis, MN 55440-0010
<PAGE>
PAGE 94
PART I. CROSS REFERENCE SHEET FOR PROSPECTUS
PURSUANT TO RULE 404(c)
IDS FUTURE VALUE CERTIFICATE
AND VARIATIONS
Item Caption in
Number Prospectus
Item 1. Forepart of the
Registration Statement
and Outside Front Cover
Page of Prospectus.
Item 2. Inside Front and Where to get information about
Outside Back Cover Pages IDSC; Table of Contents.
of Prospectus.
Item 3. Summary Informa- About the certificate
tion, Risk Factors
and Ratio of Earnings
to Fixed Charges.
Item 4. Use of Proceeds. How your money is used and
protected; Investment policies
Item 5. Determination of Not Applicable.
Offering Price.
Item 6. Dilution. Not Applicable.
Item 7. Selling Security Not Applicable.
Holders.
Item 8. Plan of How your certificate
Distribution. is managed.
Item 9. Description of About the Certificate;
Securities to Be How to invest and withdraw
Registered. funds.
Taxes on your earnings.
Item 10. Interests of Not Applicable.
Named Experts and Counsel.
<PAGE>
PAGE 95
PART I. CROSS REFERENCE SHEET FOR PROSPECTUS
PURSUANT TO RULE 404(c) (Continued)
Item Caption in
Number Prospectus
Item 11. Information with Invested and guaranteed by
Respect to the Registrant. IDSC; Regulated by government;
Relationship between IDSC and
American Express Financial
Corporation; Capital structure
and certificates issued;
Directors and Officers.
Item 12. Disclosure of Directors and Officers
Commission Position on
Indemnification for
Securities Act Liabilities.
<PAGE>
PAGE 96
IDS Future Value Certificate
Prospectus April 24, 1996
Earn attractive rates with an assured amount at the maturity date
you select
IDS Future Value Certificates are issued by IDS Certificate Company
(IDSC). You can purchase this certificate with any amount from
$1,000 to $1 million (unless you receive prior authorization from
IDSC to invest more). Your certificate earns a fixed interest rate
for maturities of four through ten years. At maturity, IDSC
guarantees you will receive your principal plus interest less any
withdrawals or penalties. Your interest rate will be determined as
described in "About the certificate."
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION, NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
This certificate is backed by IDSC's investments on deposit rather
than guaranteed or insured by the government or someone else. See
"Invested and guaranteed by IDSC" and "Regulated by government"
under "How your money is used and protected."
This prospectus describes terms and conditions of your IDS Future
Value Certificate. It contains facts that can help you decide if
the certificate is the right investment for you. Read the
prospectus before you invest and keep it for future reference. No
one has the authority to change the terms and conditions of the IDS
Future Value Certificate as described in the prospectus, or to bind
IDSC by any statement not in it.
IDS Certificate Company
IDS Tower 10
Minneapolis, MN 55440-0010
1-800-437-3133 (toll free) or
(612) 671-3800 (Minneapolis/St. Paul area)
TTY numbers:
1-800-846-4293 (toll free) or
(612) 671-1630 (Minneapolis/St. Paul area)
An American Express company
<PAGE>
PAGE 97
Where to get information about IDSC
IDSC is subject to the reporting requirements of the Securities
Exchange Act of 1934. Reports and other information on IDSC are
filed with the Securities and Exchange Commission (SEC). Copies
can be obtained from the Public Reference Section of the SEC, 450
5th St., N.W., Washington, D.C. 20549, at prescribed rates. Or you
can inspect and copy information in person at the SEC's Public
Reference Section and at the following regional offices:
Northeast Regional Office
7 World Trade Center, Suite 1300
New York, NY 10048
Midwest Regional Office
Northwestern Atrium Center
500 West Madison St., Suite 1400
Chicago, IL 60611
Pacific Regional Office
5670 Wilshire Blvd., 11th Floor
Los Angeles, CA 90036
Initial interest rates
IDSC guarantees for the maturity you choose:
o A fixed rate of interest
o This rate will be within a specified range of the average of
5-year certificates of deposit as published in the most recent
BANK RATE MONITOR Top 25 Market AverageTM, North Palm Beach,
FL, 33408, as explained under "About the Certificate."
Here are the interest rates in effect on the date of this
prospectus, April 24, 1996:
Future Value
of $1.00
Simple Effective invested today
interest annualized payable at
Maturity rate* yield** maturity
_________________________________________________________________
4 year
5 year
6 year
7 year
8 year
9 year
10 year
__________________________________________________________________
*This is the rate in effect for investments under $25,000. Rates
may depend on the factors described in "Rates for new purchases"
under "About the certificate."
**Assuming monthly compounding.<PAGE>
PAGE 98
These rates may or may not be in effect when you apply to purchase
your certificate. Rates for later periods are set at the
discretion of IDSC and may also differ from the rates shown here.
This investment is intended to be held to maturity. We reserve the
right to issue other securities with different terms.<PAGE>
PAGE 99
Contents
Table of contents
About the certificate
Investment amounts....................................... p
Maturities............................................... p
Face amount and future value............................. p
Value at maturity........................................ p
Receiving cash before maturity........................... p
Interest................................................. p
Rates for new purchases.................................. p
How to invest and withdraw funds
Buying your certificate.................................. p
Full and partial withdrawals............................. p
Retirement plans: special policies...................... p
Transfer of ownership.................................... p
For more information..................................... p
Taxes on your earnings
Retirement accounts...................................... p
Gifts to minors.......................................... p
Foreign investors........................................ p
How your money is used and protected
Invested and guaranteed by IDSC.......................... p
Regulated by government.................................. p
Backed by our investments................................ p
Investment policies...................................... p
How your money is managed
Relationship between IDSC and American Express
Financial Corporation................................. p
Capital structure and certificates issued................ p
Investment management and services....................... p
Distribution............................................. p
Employment of other American Express affiliates.......... p
Directors and officers................................... p
Auditors................................................. p
Annual financial information
Summary of selected financial information................ p
Management's discussion and analysis of
financial condition and results of operations
Report of independent auditors
Financial statements
Notes to financial statements
<PAGE>
PAGE 100
About the certificate
Investment amounts
You may purchase the IDS Future Value Certificate with a single
payment of at least $1,000 but not more than $1 million payable in
U.S. currency. Your investment may exceed $1 million only if you
receive prior authorization from IDSC.
The certificate may be used as an investment for your Individual
Retirement Account (IRA), 401(k) plan account or other qualified
retirement plan account. If so used, the amount of your
contribution (investment) will be subject to any limitations of the
plan and applicable federal law.
Maturities
You may choose a maturity term in one-year increments from four to
ten years. IDSC guarantees your interest rate in advance for the
maturity you select.
Face amount and future value
Both the face amount and future value of your certificate are
determined when you purchase your certificate. The face amount is
the amount of your initial investment. The future value is the
face amount plus the interest to be credited at maturity. Your
future value is guaranteed by IDSC when you hold your certificate
to maturity. For example, if you purchase this certificate with
$10,000 at 7% interest with a seven-year maturity, the face amount
would be equal to $10,000. Over the term of the certificate,
$6,300 of interest would accrue and be credited at maturity. The
face amount would remain at $10,000 and the future value payable to
you at maturity would be $16,300.
Value at maturity
When your certificate matures, you will receive a check for the
value of your certificate, which is the future value less any
withdrawal, discounts or fees.
Receiving cash before maturity
Interest on this investment is credited and paid at maturity.
However, if you unexpectedly find that you need your money prior to
maturity, you may withdraw all or part of your certificate subject
to a discounting formula. Partial withdrawals cannot be made
within one year of purchase. Procedures for withdrawing money, as
well as discount rates which apply, are described in "Full and
partial withdrawals" under "How to invest and withdraw funds."
<PAGE>
PAGE 101
Interest
Your certificate accrues interest from the issue date. Interest is
compounded at the end of each certificate month on the monthly
anniversary of the issue date. Interest is credited to your
certificate at maturity. We calculate the amount of interest you
earn each certificate month by applying the interest rate on your
certificate to your balance each day and adding these daily amounts
to get a monthly total. Interest is calculated on a 30-day month
and 360-day year basis.
Promotions and pricing flexibility: From time to time, IDSC may
sponsor or participate in promotions involving one or more of the
certificates and their respective terms. For example, we may offer
different rates to new clients, to existing clients, or to
individuals who purchase or use other products or services offered
by American Express Financial Corporation (AEFC) or its
subsidiaries. These promotions will generally be for a specified
period of time. We also may offer different rates based on your
amount invested, maturity selected, geographic location and whether
the certificate is purchased for an IRA or a qualified retirement
account. These rates for new purchases will always be within the
1% range of rates described below.
Rates for new purchases
When your application is accepted and we have received your initial
investment, we will send you a confirmation of your purchase
showing the rate that your investment will earn. This rate will
not be changed during the term of your certificate. The
certificate rate will be determined using the BANK RATE MONITOR Top
25 Market AverageTM (the BRM Average) rate for 5-year certificates
of deposit (the Index).
For deposits of less than $25,000, the following rates will be
guaranteed:
In the case of the 4-year certificate, IDSC guarantees that the
rate will be from 30 basis points (0.30%) below to 70 basis points
(0.70%) above the index.
In the case of the 5-year certificate, IDSC guarantees that the
rate will be from 20 basis points below to 80 basis points above
the index.
In the case of the 6-year certificate, IDSC guarantees that the
rate will be from 10 basis points below to 90 basis points above
the index.
In the case of the 7-year certificate, IDSC guarantees that the
rate will be from 10 basis points below to 90 basis points above
the index.<PAGE>
PAGE 102
In the case of the 8-year certificate, IDSC guarantees that the
rate will be from 10 basis points below to 90 basis points above
the index.
In the case of the 9-year certificate, IDSC guarantees that the
rate will be from 10 basis points below to 90 basis points above
the index.
In the case of the 10-year certificate, IDSC guarantees that the
rate will be from 10 basis points below to 90 basis points above
the index.
For example, if the index published in the prior week for 5-year
certificates of deposit is 6.50%, the rate on the 7-year maturity
certificate for a deposit under $25,000, would be between 6.40% and
7.40%.
For deposits of $25,000 or more IDSC guarantees that the rate will
be within ranges that are 20 basis points higher than the
respective ranges described above. For example, in the case of the
10-year certificate, IDSC guarantees that the rate will be within
10-110 basis points above the index.
The BRM Average is an index of rates and annual effective yields
offered on various length certificates of deposit by large banks
and thrifts in 25 metropolitan areas. The frequency of compounding
varies among the banks and thrifts. Certificates of deposit in the
BRM Average are government-insured fixed-rate time deposits.
The BANK RATE MONITOR is available in your local library. To
obtain information on current BRM Average rates call the Client
Service Organization at the telephone numbers listed on the back
cover between 8 a.m. to 6 p.m. your local time.
Rates for new purchases are reviewed and may change weekly. Rates
for new purchases currently take effect on Wednesday and are within
the range of rates described above in the BRM Average, published on
Monday of the same week. Normally, the rate you receive for your
chosen maturity will be the higher of:
o the rate in effect on the date of your application
o the rate in effect on the date your application is
accepted by IDSC.
However, if your application bears a date more than seven days
before its receipt by IDSC, the rate you receive will be the higher
of:
o the rate in effect on the date your application is
accepted by IDSC
o the rate in effect seven days before receipt.
Active or retired AEFC employees, IDSC directors, American Express
financial advisors, their immediate families and any U.S. employee
of any affiliated company of IDSC are guaranteed an initial rate 75
basis points above the rate offered to the general public,
reflecting the lower distribution costs associated with such sales.
<PAGE>
PAGE 103
Performance: From February 1991 through February 1996, IDS Future
Value Certificate yields for a 5-year term were higher than average
5-year bank and thrift certificate of deposit yields as measured by
the BRM Average (prior to January 13, 1993, yields were measured by
the BRM National IndexTM, an average of CD yields in 10 cities).
Yields from February 1991 through February 1996
8%
____IDS Future Value Certificate
****Certificates of Deposit
6%
4% Two lines comparing the yields for IDS Future Value
Certificate against that of a Certificate of Deposit
with Future Value's yield generally above the other
line.
2%
91 92 93 94 95 96
The graph compares past yields and should not be considered a
prediction of future performance.
How to invest and withdraw funds
Buying your certificate
Your American Express financial advisor will help you fill out and
submit an application to open an account with us and purchase a
certificate. We will process the application at our corporate
offices in Minneapolis. When your application is accepted and we
have received your initial investment, we will send you a
confirmation of your purchase showing the date of issue, verifying
the maturity you selected, the applicable rate of interest as
described under "Rates for new purchases," and the future value of
your certificate. See "Purchase policies" below.
IMPORTANT: When opening an account, you must provide IDSC with
your correct Taxpayer Identification Number (Social Security or
Employer Identification Number). See "Taxes on your earnings."
<PAGE>
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Purchase policies
o Investments must be received and accepted in the Minneapolis
headquarters on a business day before 3 p.m. Central time to
be included in your account that day. Otherwise your purchase
will be processed the next business day.
o You have 15 days from the date of purchase to cancel your
investment without penalty by either writing or calling the
Client Service Organization at the address or phone number on
the back of this prospectus. If you decide to cancel your
certificate within this 15-day period, you will not earn any
interest.
o If you purchase a certificate with a personal check or other
non-guaranteed funds, AEFC will wait one day for the process
of converting your check to federal funds (e.g., monies of
member banks within the Federal Reserve Bank) before your
purchase will be accepted and you begin earning interest.
o IDSC has the authority to determine whether to accept an
application and sell a certificate.
A number of special policies apply to purchases, withdrawals and
exchanges within IRAs, 401(k) plans and other qualified retirement
plans. See "Retirement plans: special policies."
Two ways to invest
1
By mail
Send your check along with your application to:
Regular mail:
American Express Financial Advisors Inc.
Client Service Organization
IDS Tower 10
Minneapolis, MN 55440-0010
Express mail:
American Express Financial Advisors Inc.
Client Service Organization
733 Marquette Ave.
Minneapolis, MN 55402
2
By wire
If you have an established account, you may wire money to:
Norwest Bank Minneapolis
Routing No. 091000019
Minneapolis, MN
Attn: Domestic Wire Dept.
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Give these instructions:
Credit IDS Account #00-30-015 for personal account # (your
personal account number) for (your name).
If this information is not included, the order may be rejected and
all money received less any costs IDSC incurs, will be returned
promptly.
o Minimum amount you may wire: $1000
o Wire orders can be accepted only on days when your bank, AEFC,
IDSC and Norwest Bank Minneapolis are open for business.
o Wire purchases are completed when wired payment is received
and we accept the purchase.
o Wire investments must be received and accepted in the
Minneapolis headquarters on a business day before 3 p.m.
Central time to be credited that day. Otherwise your purchase
will be processed the next business day.
o IDSC, AEFC and its other subsidiaries are not responsible for
any delays that occur in wiring funds, including delays in
processing by the bank.
o You must pay any fee the bank charges for wiring.
Full and partial withdrawals
If you need your money before maturity, you may withdraw your
certificate for its full value, or make a partial withdrawal of
$500 or more after the first year. However:
o If your withdrawal request is received in the Minneapolis
headquarters on a business day before 3 p.m. Central time, it
will be processed that day and payment will be sent the next
business day. Otherwise, your request will be processed on
business day later.
o Interest on full and partial withdrawals of principal is
subject to discounting, described below.
o You may not otherwise make a partial withdrawal if it would
reduce your certificate balance to less than $1,000. If you
request such a withdrawal, we will contact you for revised
instructions.
o If a withdrawal reduces your account value to a point where we
pay a lower interest rate, you will earn the lower rate from
the time of withdrawal until maturity.
Return of principal: You will always receive an amount no less
than your original investment (the "face amount") and no more than
your face amount plus accrued interest. This is still true of the <PAGE>
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total amount you will receive even if you make a series of partial
withdrawals.
Discount rate: If you request a full or partial withdrawal, the
amount you receive will be calculated by discounting your
certificate's future value at maturity over the time remaining
until it would have matured. The discount rate is 50 basis points
(0.50%) higher than the rate in effect for new deposits for the
same maturity as your certificate at the time of withdrawal. The
discount rate will differ for certificates purchased by active or
retired AEFC employees, IDSC's directors, American Express
financial advisors, their immediate families and any U.S. employee
of any affiliated company of IDSC.
We use the future value (principal and interest through maturity)
as the starting point in the calculation. Using a discount rate
that is a function of new business rates at the time of the
withdrawal, we discount this future value on a monthly basis for
the number of months remaining to maturity. If the result is lower
than principal, you will receive principal; if the discounted
amount is more than principal and accrued interest for the time
completed, you will receive principal and accrued interest only.
You can calculate the surrender value on a calculator using the
present value function using the following assumptions:
Calculator Value Certificate Value
Future value Future (maturity) value
Interest Discount rate divided by 12
Periods Number of months remaining
If the discount rate at the time of withdrawal is higher than your
interest rate, you will lose interest. The loss of interest would
be more substantial the earlier you withdraw the money from your
certificate.
Here are some other points to help you understand withdrawal value:
o If the discount rate at the time of withdrawal is lower than the
interest rate at the time of purchase, you will receive your
principal and all of your accrued interest.
o If the discount rate at the time of withdrawal is higher than
the interest rate at the time of purchase, you will receive your
principal and will lose some or all of your interest.
o Because the withdrawal value calculation discounts the future
value for the number of months remaining to maturity, the
potential loss of interest is more substantial the earlier the
withdrawal occurs, all else being equal.
o If the discounted value is more than the principal and interest
accrued to date, you will receive the principal and accrued
interest.
o If the withdrawal value is lower than the original principal
invested, you will receive your principal investment at the time
of withdrawal. <PAGE>
PAGE 107
Examples:
To help you understand the way the withdrawal value is calculated,
here are some examples. Assume for all examples the following:
The face amount will be $10,000. Maturity is 10 years. Interest
rate is 6.50%, and the yield is 6.69%. The future value payable at
maturity is $19,122. The withdrawal will occur in year six. The
face amount plus accrued interest in year six is $14,754.
The following chart shows the withdrawal values in year six,
assuming discount rates of 5.5%, 7.0%, and 9.5%. The examples
assume the withdrawal occurs in year six.
*Note that in this scenario, if you withdraw from your certificate
in any year and the discount rate is at 5.5%, you will receive the
face amount plus accrued interest.
The following table provides information for a withdrawal in year
six:
__________________________________________________________________
Rate Environment Discount Rate Withdrawal Value
Interest rates generally 7.0% $14,464
unchanged from time of ($19,122 discounted at
purchase 7.0% for the four
years remaining until
maturity)
Interest rates are higher 9.5% $13,096
at withdrawal than when ($19,122 discounted at
purchased 9.5% for the four
years remaining until
maturity)
Interest rates are lower 5.5% $14,754
at withdrawal than when (The amount you
purchased receive is equal to
your face amount plus
accrued interest)
___________________________________________________________________
In the above examples, you would never receive less than your
$10,000 original investment or more than $14,754, which is the face
amount plus accrued interest.
Because the discount rate can change periodically, the withdrawal
value of your account changes periodically as well. Should an
emergency arise and you need to know your withdrawal value, it is
readily available by contacting your American Express financial
advisor or calling the Client Service Organization at the telephone
numbers listed on the back cover.
Other full and partial withdrawal policies:
o If you request a partial or full withdrawal of a certificate
recently purchased by a check or money order that is not
guaranteed, we will wait for your check to clear. Please
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PAGE 108
expect a minimum of 10 days from the date of your payment before
IDSC mails a check to you. (A check may be mailed earlier if
your bank provides evidence that your check has cleared.)
o If your certificate is pledged as collateral, any withdrawal
will be delayed until we get approval from the secured party.
o Any payments to you may be delayed under applicable rules,
regulations or orders of the SEC.
Two ways to request a withdrawal
1
By phone
o Call the Client Service Organization at the telephone numbers
listed on the back cover between 8 a.m. and 6 p.m. your local
time.
o Maximum phone request: $50,000
o A telephone withdrawal request will not be allowed within 30
days of a phoned-in address change.
o We will honor any telephone request believed to be authentic and
will use reasonable procedures to confirm that they are. This
includes asking identifying questions and tape recording
telephone calls. So long as reasonable procedures are followed,
neither IDSC nor AEFC or its subsidiaries will be liable for any
loss resulting from fraudulent requests.
You may request that telephone withdrawals not be authorized from
your account by writing the Client Service Organization.
2
By mail
Send your name, account number and request for a withdrawal to:
Regular mail:
American Express Financial Advisors Inc.
Client Service Organization
IDS Tower 10
Minneapolis MN 55440-0010
Express mail:
American Express Financial Advisors Inc.
Client Service Organization
733 Marquette Avenue
Minneapolis MN 55402
Written requests are required for:
o Transactions over $50,000
o Pension plans and custodial accounts where the minor has reached
the age at which custodianship should terminate.
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Three ways to receive payment when you withdraw funds
1
By regular or express mail
o Mailed to address on record; please allow seven days for mailing
o Payable to name(s) you requested
o For express mail, you will pay charges that vary depending on
the courier you select. For a partial withdrawal leaving a
remaining balance of more than $1,000, these charges will be
deducted from the remaining balance. If the remaining balance
is less than $1,000, or if it is a full withdrawal, charges are
deducted from proceeds of the withdrawal.
2
By wire
o Minimum wire withdrawal: $1000
o Request that money be wired to your bank
o Bank account must be in same ownership as IDSC's account
o Pre-authorization required. Complete the bank wire
authorization section in the application or use a form supplied
by your American Express financial advisor. All registered
owners must sign.
o A service fee, if any, may be deducted from your balance (for
partial withdrawals) or from the proceeds of a full withdrawal.
3
By electronic transfer
o Available only for preauthorized scheduled partial withdrawals
and other full or partial withdrawals
o No charge
o Deposited electronically in your bank account
o Allow two to five business days from request to deposit.
Retirement plans: special policies
o If the certificate is purchased for a 401(k) plan or other
qualified retirement plan account, the terms and conditions of
the certificate apply to the plan as the owner of this
certificate. However, the terms of the plan, as interpreted by
the plan trustee or administrator, will determine how a
participant's individual account under the plan is administered.
These terms may differ from the terms of the certificate.
o The annual custodial fee for IRA or non-401(k) qualified
retirement plans may be deducted from your certificate account.
<PAGE>
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It may reduce the amount payable at maturity or the amount
received upon an early withdrawal.
o Retirement plan withdrawals may be subject to withdrawal
penalties or loss of interest even if they are not subject to
federal tax penalties.
o If you withdraw all funds from your last account in an IRA plan,
a $25 termination fee will apply.
o The IRA termination fee will be waived if withdrawal occurs upon
the owner's death.
Transfer of ownership
While the certificate is not negotiable, IDSC will transfer
ownership upon written notification to the Client Service
Organization. However, if you have purchased your certificate for
an IRA, 401(k) plan or other qualified retirement plan, you may be
unable to transfer or assign the certificate without losing the
account's favorable tax status. Please contact your tax advisor.
For more information
For information on purchases, withdrawals, transfers of ownership,
proper instructions and other service questions regarding your
certificate, please consult your financial advisor or call IDSC's
toll free Client Service Organization at the telephone numbers
listed on the back cover.
Taxes on your earnings
Interest that has been compounded on your account at the end of
each year is taxable each year. Each calendar year we provide the
certificate account owner and the IRS with reports of all earnings
over $10 (Form 1099). Withdrawals are reported to the certificate
owner and the IRS on Form 1099-B, Proceeds from Broker
Transactions.
Retirement accounts
If you are using the certificate as an investment for an IRA,
401(k) plan account or other qualified retirement plan account,
income tax rules for your IRA or qualified plan apply. Generally,
you will pay no income taxes on your investment's earnings--and, in
many cases, on part or all of the investment itself--until you
begin to make withdrawals.
If your certificate is held in a Custodial Retirement Plan (or
Keogh plan), special rules may apply at maturity. If no other
investment instructions are provided directing how to handle your
certificate at maturity, the full value of the certificate will
automatically transfer to a new or existing cash management account
according to the rules outlined in the Custodial Retirement Plan
document.
IDSC will withhold federal income taxes of 10% on IRA withdrawals
unless you tell us not to. IDSC is required to withhold federal <PAGE>
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income taxes of 20% on most other qualified plan distributions,
unless the distribution is directly rolled over to another
qualified plan or IRA.
Withdrawals from retirement accounts are generally subject to a
penalty tax of 10% by the IRS if you make them before age 59-1/2,
unless you are disabled or if they are made by your beneficiary in
the event of your death. (Other exceptions also may apply.)
Consult your tax advisor to see how these rules apply to you before
you request a distribution from your plan or IRA.
Gifts to minors
The certificate may be given to a minor under either the Uniform
Gifts or Uniform Transfers to Minors Act (UGMA/UTMA), whichever
applies in your state. UGMAs/UTMAs are irrevocable. Generally,
under federal tax laws, income over $1,200 on property owned by
children under age 14 will be taxed at the parents' marginal tax
rate, while income on property owned by children 14 or older will
be taxed at the child's rate.
Your Taxpayer Identification Number (TIN) and backup withholding:
As with any financial account you open, you must list your current
and correct Taxpayer Identification Number (TIN) -- either your
Social Security or Employer Identification Number. The TIN must be
certified under penalties of perjury on your application when you
open an account with IDSC.
If you don't provide the TIN to IDSC, or the TIN you report is
incorrect, you could be subject to backup withholding of 31% of
your interest earnings. You could also be subject to further
penalties, such as:
o a $50 penalty for each failure to supply your correct TIN
o a civil penalty of $500 if you make a false statement that
results in no backup withholding
o criminal penalties for falsifying information.
You could also be subject to backup withholding because you failed
to report interest on your tax return as required.
To help you determine the correct TIN to use on various types of
accounts, please use this chart:
How to determine the correct TIN:
Use the Social Security or
For this type of account Employer Identification Number of
Individual or joint The individual or first person
listed on the account
Custodian account of a minor The minor
(Uniform Gifts/Transfers to
Minors Act)
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A living trust The grantor-trustee (the person
who puts the money into the trust)
An irrevocable trust, The legal entity (not the personal
pension trust or estate representative or trustee, unless
no legal entity is designated in
the account title)
Sole proprietorship or The owner or partnership
partnership
Corporate The corporation
Association, club or The organization
tax-exempt organization
For details on TIN requirements, ask your financial advisor or
local AEFC office for Federal Form W-9, Request for Taxpayer
Identification Number and Certification.
Foreign investors
If you are not a citizen or resident of the United States, you must
supply IDSC with Form W-8, Certificate of Foreign Status when you
purchase your certificate, and you must resupply it every three
years. You must also supply both a current mailing address and an
address of foreign residency, if different. IDSC will not accept
purchases of certificates by nonresident aliens without an
appropriately certified Form W-8 (or approved substitute). Also,
if you do not supply Form W-8 you will be subject to backup
withholding on interest payments and withdrawals.
Interest paid on the certificate is "portfolio interest" as defined
in U.S. Internal Revenue Code Section 871(h) if earned by a
nonresident alien. Even though your interest income is not taxed
by the U.S. government, it will be reported at year end to you and
to the U.S. government on a Form 1042S, Foreign Person's U.S.
Source Income Subject to Withholding. The United States
participates in various tax treaties with foreign countries, which
provide for sharing of tax information.
Estate tax: If you are a nonresident alien and you die while
owning a certificate, IDSC will need a statement from persons IDSC
believes are knowledgeable about your estate. The statement must
be in a form satisfactory to IDSC and must tell us that, on your
date of death, your estate did not include any property in the
United States for U.S. estate tax purposes. If we do not receive
the statement, we generally will not take action regarding your
certificate until we receive a transfer certificate from the IRS or
satisfactory evidence that the estate is being administered by an
executor or administrator appointed, qualified and acting within
the United States. In general, a transfer certificate provides
assurance that the IRS will not claim your certificate to satisfy
estate taxes.
IMPORTANT: This information is a brief and selective summary of
certain federal tax rules that apply to this certificate. Tax <PAGE>
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matters are highly individual and complex, and you should consult a
qualified tax adviser about your personal situation.
How your money is used and protected
Invested and guaranteed by IDSC
The IDS Future Value Certificate is issued and guaranteed by IDSC,
a wholly owned subsidiary of AEFC. We are by far the largest
issuer of face amount certificates in the United States, with total
assets of more than $___ billion and a net worth in excess of $___
million on Dec. 31, 1995.
We back our certificates by investing the money received and
keeping the invested assets on deposit. Our investments generate
interest and dividends, out of which we pay:
o interest to certificate owners
o various expenses, including taxes, fees to AEFC for advisory and
other services and distribution fees to American Express
Financial Advisors Inc.
For a review of significant events relating to our business, see
"Management's discussion and analysis of financial condition and
results of operations." Our certificates are not rated by a
national rating agency.
Most banks and thrifts offer investments known as certificates of
deposit (CDs) that are similar to our certificates in many ways.
Early withdrawal of bank CDs often results in penalties. Banks and
thrifts generally have federal deposit insurance for their deposits
and lend much of the money you deposit to individuals, businesses
and other enterprises. Other financial institutions may offer
investments with comparable combinations of safety and return on
investment.
Regulated by government
Because the IDS Future Value Certificate is a security, its offer
and sale are subject to regulation under federal and state
securities laws. (It is a face-amount certificate -- not a bank
product, an equity investment, a form of life insurance or an
investment trust.)
The federal Investment Company Act of 1940 requires us to keep
investments on deposit in a segregated custodial account to protect
all of our outstanding certificates. These investments back the
entire value of your certificate account. Their amortized cost
must exceed the required carrying value of the outstanding
certificates by at least $250,000. As of Dec. 31, 1995, the
amortized cost of these investments exceeded the required carrying
value of our outstanding certificates by more than $___ million.
<PAGE>
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Backed by our investments
Our investments are varied and of high quality. This was the
composition of our portfolio as of Dec. 31, 1995:
Type of investment Net amount invested
Corporate and other bonds 31%
Government agency bonds 27
Preferred stocks 23
Mortgages 9
Municipal bonds 5
Cash and cash equivalents 5
More than 95% of our securities portfolio (bonds and preferred
stocks) is rated investment grade. For additional information
regarding securities ratings, please refer to Note 3B in the
financial statements.
Most of our investments are on deposit with American Express Trust
Company (formerly IDS Trust Company), Minneapolis, although we also
maintain separate deposits as required by certain states. American
Express Trust Company is a wholly owned subsidiary of AEFC. Copies
of our Dec. 31, 1995 schedule of Investments in Securities of
Unaffiliated Issuers are available upon request. For comments
regarding the valuation, carrying values and unrealized
appreciation (depreciation) of investment securities, see Notes 1,
2 and 3 to the financial statements.
Investment policies
In deciding how to diversify the portfolio -- among what types of
investments in what amounts -- the officers and directors of IDSC
use their best judgment, subject to applicable law. The following
policies currently govern our investment decisions:
Purchasing securities on margin: We will not purchase any
securities on margin or participate on a joint basis or a joint-
and-several basis in any trading account in securities.
Commodities: We have not and do not intend to purchase or sell
commodities or commodity contracts.
Underwriting: We do not intend to engage in the public
distribution of securities issued by others. However, if we
purchase unregistered securities and later resell them, we may be
considered an underwriter under federal securities laws.
Borrowing money: From time to time we have established a line of
credit if management believed borrowing was necessary or desirable.
While a line of credit does not currently exist, it may be
established again in the future. We may pledge some of our assets
as security. We may occasionally use repurchase agreements as a
way to borrow money. Under these agreements, we sell debt <PAGE>
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securities to our lender, and repurchase them at the sales price
plus an agreed-upon interest rate within a specified period of
time.
Real estate: We may invest directly in real estate, though we have
not generally done so in the past. We do invest in mortgage loans.
Lending securities: We may lend some of our securities to broker-
dealers and receive cash equal to the market value of the
securities as collateral. We invest this cash in short-term
securities. If the market value of the securities goes up, the
borrower pays us additional cash. During the course of the loan,
the borrower makes cash payments to us equal to all interest,
dividends and other distributions paid on the loaned securities.
We will try to vote these securities if a major event affecting our
investment is under consideration.
When-issued securities: Most of our investments are in debt
securities, some of which are purchased on a when-issued basis. It
may take as long as 45 days or more before these securities are
issued and delivered to us. We generally do not pay for these
securities or start earning on them until delivery. We have
established procedures to ensure that sufficient cash is available
to meet when-issued commitments.
Financial transactions: We buy or sell various types of options
contracts for hedging purposes or as a trading technique to
facilitate securities purchases or sales. We buy interest rate
caps for hedging purposes. These pay us a return if interest rates
rise above a specified level. IDSC may enter into other financial
transactions, including futures, and other derivatives, for the
purpose of managing the interest rate exposures associated with
IDSC's assets or liabilities. Derivatives are financial
instruments whose performance is derived, at least in part, from
the performance of an underlying asset, security or index. A small
change in the value of the underlying asset, security or index may
cause a sizable gain or loss in the fair value of the derivative.
Illiquid securities: A security is illiquid if it cannot be sold
in the normal course of business within seven days at approximately
its current market value. Some investments cannot be resold to the
U.S. public because of their terms or government regulations. All
securities, however can be sold in private sales, and many may be
sold to other institutions and qualified buyers or on foreign
markets. IDSC's investment advisor will follow guidelines
established by the board and consider relevant factors such as the
nature of the security and the number of likely buyers when
determining whether a security is illiquid. No more than 15% of
IDSC's investment portfolio will be held in securities that are
illiquid. In valuing its investment portfolio to determine this
15% limit, IDSC will use statutory accounting. This means that,
for this purpose, the portfolio will be valued in accordance with
applicable investment statutes rather than generally accepted
accounting principles.
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Restrictions: There are no restrictions on concentration of
investments in any particular industry or group of industries or on
rates of portfolio turnover.
How your money is managed
Relationship between IDSC and AEFC
IDSC was originally organized as Investors Syndicate of America,
Inc., a Minnesota corporation, on Oct. 15, 1940, and began business
as an issuer of face amount investment certificates on Jan. 1,
1941. The company became a Delaware corporation on Dec. 31, 1977,
and changed its name to IDS Certificate Company on April 2, 1984.
Before IDSC was created, AEFC (formerly known as IDS Financial
Corporation) our parent company and organizer, had issued similar
certificates since 1894. As of Jan. 1, 1995, IDS Financial
Corporation changed its name to AEFC. IDSC, IDS Financial
Corporation and now AEFC have never failed to meet their
certificate payments.
During its many years in operation, AEFC has become a leading
manager of investments in mortgages and securities. As of Dec. 31,
1995, AEFC managed investments, including its own, of more than
$___ billion. American Express Financial Advisors Inc., a wholly
owned subsidiary of AEFC, provides a broad range of financial
planning services for individuals and businesses through its
nationwide network of more than ___ offices and more than _____
financial advisors. AEFC financial planning services are
comprehensive, beginning with a detailed written analysis that's
tailored to your needs. Your analysis may address one or all of
these six essential areas: financial position, protection
planning, investment planning, income tax planning, retirement
planning and estate planning.
AEFC itself is a wholly owned subsidiary of American Express
Company, a financial services company with executive offices at
American Express Tower, World Financial Center, New York, NY 10285.
American Express Company is a financial services company engaged
through subsidiaries in other business including:
o travel related services (including American ExpressR Card and
Travelers Cheque operations through American Express Travel
Related Services Company, Inc. and its subsidiaries), and
o international banking services (through American Express Bank
Ltd. and its subsidiaries).
American Express Financial Advisors Inc. is not a bank, and the
securities offered by it, such as face amount certificates issued
by IDSC, are not backed or guaranteed by any bank, nor are they
insured by the FDIC.
<PAGE>
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Capital structure and certificates issued
IDSC has authorized, issued and has outstanding 150,000 shares of
common stock, par value of $10 per share. AEFC owns all of the
outstanding shares.
As of Dec. 31, 1995, IDSC had issued (in face amount)
$______________ of installment certificates and $______________ of
single payment certificates.
Investment management and services
Under an Investment Advisory and Services Agreement, AEFC acts as
our investment advisor and is responsible for:
o providing investment research,
o making specific investment recommendations, and
o executing purchase and sale orders according to our policy of
obtaining the best price and execution.
All these activities are subject to direction and control by our
board of directors and officers. Our agreement with AEFC requires
annual renewal by our board, including a majority of directors who
are not interested persons of AEFC or IDSC as defined in the
federal Investment Company Act of 1940.
For its services, we pay AEFC a monthly fee, equal on an annual
basis to a percentage of the total book value of certain assets
(included assets).
Advisory and services fee computation:
Included assets Percentage of total book value
First $250 million 0.75%
Next 250 million 0.65
Next 250 million 0.55
Next 250 million 0.50
Any amount over $1 billion 0.45
Included assets are all assets of IDSC except mortgage loans, real
estate, and any other asset on which we pay an advisory or service
fee.
Advisory and services fees for the past three years:
Percentage of
Year Total fees included assets
1995 $__________ 0.__%
1994 $13,565,432 0.__
1993 $15,036,091 0.__
Estimated advisory and services fees for 1996 are $__________.
<PAGE>
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Other expenses payable by IDSC: The Investment Advisory and
Services Agreement provides that we will pay:
o costs incurred by us in connection with real estate and
mortgages,
o taxes,
o depository and custodian fees,
o brokerage commissions,
o fees and expenses for services not covered by other agreements
and provided to us at our request, or by requirement, by
attorneys, auditors, examiners and professional consultants who
are not officers or employees of AEFC,
o fees and expenses of our directors who are not officers or
employees of AEFC,
o provision for certificate reserves (interest accrued on
certificate owner accounts), and
o expenses of customer settlements not attributable to sales
function.
Distribution
Under a Distribution Agreement with American Express Financial
Advisors Inc., we pay 5% of the purchase price for the distribution
of this certificate. This fee is not assessed to your certificate
account.
Total distribution fees paid to American Express Financial Advisors
Inc. for all series of certificates amounted to $__________ during
the year ended Dec. 31, 1995. We expect to pay American Express
Financial Advisors Inc. distribution fees amounting to $__________
during 1996.
See Note 1 to financial statements regarding deferral of
distribution fee expense.
American Express Financial Advisors Inc. pays commissions to its
financial advisors and pays other selling expenses in connection
with services to us. Our board of directors, including a majority
of directors who are not interested persons of American Express
Financial Advisors Inc. or IDSC, approved this distribution
agreement.
Employment of other American Express affiliates
AEFC may employ an affiliate of American Express Company as
executing broker for our portfolio transactions only if:
o we receive prices and executions at least as favorable as those
offered by qualified independent brokers performing similar
services;
o the affiliate charges us commissions consistent with those
charged to comparable unaffiliated customers for similar
transactions; and
o the affiliate's employment is consistent with the terms of the
current Investment Advisory and Services Agreement and federal
securities laws.
<PAGE>
PAGE 119
Directors and officers
AEFC's directors, chairman, president and controller are elected
annually for a term of one year. The other executive officers are
appointed by the president. We paid a total of $______ during 1995
to directors not employed by AEFC.
Board of Directors
David R. Hubers*
Born in 1943
Director since 1987
President and chief executive officer of AEFC since 1993. Senior
vice president and chief financial officer of AEFC from 1984 to
1993.
Charles W. Johnson
Born in 1929
Director since 1989
Former vice president and group executive, Industrial Systems, with
Honeywell Inc. Retired 1989.
Edward Landes
Born in 1919
Director since 1984
Development consultant. Former sales manager - Supplies Division
and district manager - Data Processing Division of IBM Corporation.
Retired 1983.
John V. Luck Ph.D.
Born in 1926
Director since 1987
Former senior vice president - Science and Technology with General
Mills, Inc. Employed with General Mills Inc. since 1970. Retired
1987.
James A. Mitchell*
Born in 1941
Director since 1994
Chairman of the board of directors since 1994. Executive vice
president - marketing and products of AEFC since 1994. Senior vice
president - insurance operations of AEFC and president and chief
executive officer of IDS Life Insurance Company from 1986 to 1994.
Harrison Randolph
Born in 1916
Director since 1968
Gordon H. Ritz
Born in 1926
Director since 1968<PAGE>
PAGE 120
President, Con Rad Broadcasting Corp. Director, Sunstar Foods and
Mid-America Publishing.
Stuart A. Sedlacek*
Born in 1957
Director since 1994
President since 1994. Vice president - assured assets of AEFC
since 1994. Vice president and portfolio manager from 1988 to
1994. Executive vice president - assured assets of IDS Life
Insurance Company since 1994.
*"Interested Person" of IDSC as that term is defined in Investment
Company Act of 1940.
Executive officers
Stuart A. Sedlacek
Born in 1957
President since 1994
Morris Goodwin Jr.
Born in 1951
Vice president and treasurer since 1989
Vice president and corporate treasurer of AEFC since 1989. Chief
financial officer and treasurer of American Express Trust Company
from 1988 to 1989.
Timothy S. Meehan
Born in 1957
Secretary since 1995
Secretary of AEFC and American Express Financial Advisors Inc.
since 1995. Senior counsel to AEFC since 1995. Counsel from 1990
to 1995.
Lorraine R. Hart
Born in 1951
Vice president-investments since 1994
Vice President - insurance investments of AEFC since 1989. Vice
president, investments of IDS Life Insurance Company since 1992.
Jay C. Hatlestad
Born in 1957
Vice president and controller of IDS Certificate Company since 1994
Manager of investment accounting of IDS Life Insurance Company from
1986 to 1994.
Bruce A. Kohn
Born in 1951
Vice president and general counsel since 1993
Counsel to AEFC since 1992. Associate counsel from 1987 to 1992.
<PAGE>
PAGE 121
F. Dale Simmons
Born in 1937
Vice president - Real Estate Loan Management since 1993
Vice president of AEFC since 1992. Senior portfolio manager of
AEFC since 1989. Assistant vice president from 1987 to 1992.
The officers and directors as a group beneficially own less than 1%
of the common stock of American Express Company.
IDSC has provisions in its bylaws relating to the indemnification
of its officers and directors against liability, as permitted by
law. Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers or
persons controlling the registrant pursuant to the foregoing
provisions, the registrant has been informed that in the opinion of
the SEC such indemnification is against public policy as expressed
in the Act and is therefore unenforceable.
Auditors
A firm of independent auditors audits our financial statements at
the close of each fiscal year (Dec. 31). Copies of our annual
financial statements (audited) and semiannual financial statements
(unaudited) are available to any certificate owner upon request.
Ernst & Young LLP, Minneapolis, has audited the financial
statements for each of the years in the three-year period ended
Dec. 31, 1995. These statements are included in this prospectus.
Ernst & Young LLP is also the auditor for American Express Company,
the parent company of AEFC and IDSC.
Other certificates issued by IDSC: Your American Express financial
advisor can give you more information on four other certificates
issued by IDSC. These certificates offer a wide range of
investment terms and features.
IDS Cash Reserve Certificate - A single payment certificate that
permits additional investments on which IDSC guarantees interest in
advance for a three-month term.
IDS Flexible Savings Certificate - A single payment certificate
that permits additional investments and on which IDSC guarantees
interest in advance for a term of 6, 12, 18, 24, 30 or 36 months.
IDS Installment Certificate - An installment payment certificate
that declares interest in advance for a three-month period and
offers bonuses in the third through sixth years for regular
investments.
IDS Stock Market Certificate - A single payment certificate that
calculates all or part of your interest based on stock market
performance, as measured by a broad market index, with IDSC's
guarantee of return of principal.<PAGE>
PAGE 122
(Back cover of prospectus)
Quick telephone reference
Client Service Organization/Transaction Line
Withdrawals, transfers, inquiries
National/Minnesota: 800-437-3133
Mpls./St. Paul area: 612-671-3800
TTY Service
For the hearing impaired
800-846-4293
American Express Financial Corporation Infoline
Current rate information (automated response, TouchtoneR phones
only)
National/Minnesota: 800-272-4445
Mpls./St. Paul area: 612-671-1630
Your American Express financial advisor:
IDS Future Value Certificate
IDS Tower 10
Minneapolis, MN 55440-0010
<PAGE>
PAGE 123
PART I. CROSS REFERENCE SHEET FOR PROSPECTUS
PURSUANT TO RULE 404(c)
IDS STOCK MARKET CERTIFICATE - AEBI
AND VARIATIONS
Item Caption in
Number Prospectus
Item 1. Forepart of the
Registration Statement
and Outside Front Cover
Page of Prospectus.
Item 2. Inside Front and Where to get information about
Outside Back Cover Pages IDSC; Table of Contents.
of Prospectus.
Item 3. Summary Informa- About the certificate
tion, Risk Factors
and Ratio of Earnings
to Fixed Charges.
Item 4. Use of Proceeds. How your money is used and
protected; Investment policies
Item 5. Determination of Not Applicable.
Offering Price.
Item 6. Dilution. Not Applicable.
Item 7. Selling Security Not Applicable.
Holders
Item 8. Plan of How your certificate
Distribution. is managed.
Item 9. Description of About the Certificate;
Securities to Be How to invest and withdraw
Registered. funds.
Taxes on your earnings.
Item 10. Interests of Not Applicable.
Named Experts and Counsel.
<PAGE>
PAGE 124
PART I. CROSS REFERENCE SHEET FOR PROSPECTUS
PURSUANT TO RULE 404(c) (Continued)
Item Caption in
Number Prospectus
Item 11. Information with Invested and guaranteed by
Respect to the Registrant. IDSC; Regulated by government;
Relationship between IDSC and
American Express Financial
Corporation; Capital structure
and certificates issued;
Directors and Officers.
Item 12. Disclosure of Directors and Officers
Commission Position on
Indemnification for
Securities Act Liabilities.
<PAGE>
PAGE 125
IDS Stock Market Certificate
Prospectus April 24, 1996
Potential for stock market growth with safety of principal
IDS Stock Market Certificates are issued by IDS Certificate Company
(IDSC) (the Issuer). You can purchase this certificate with a
single investment of at least $1,000 but not more than $1 million
(unless you receive prior authorization from the Issuer to invest
more). As long as you stay within this limit, you can make
additional investments at the end of a term. Your principal is
guaranteed by the Issuer. You can participate in any increase of
the stock market based on the S&P 500 Index while protecting your
principal. In addition, you decide whether part of your return
will be guaranteed by IDSC or whether all of it will be tied to the
market. You can keep your certificate for up to 14 terms.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION, NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
This prospectus describes terms and conditions of your IDS Stock
Market Certificate. It contains facts that can help you decide if
the certificate is the right investment for you. Read the
prospectus before you invest and keep it for future reference. No
one has the authority to change the terms and conditions of the IDS
Stock Market Certificate as described in the prospectus, or to bind
the Issuer by any statement not in it.
THE CERTIFICATE IS NOT A DEPOSIT OR OBLIGATION OF, OR GUARANTEED OR
ENDORSED BY, ANY BANK OR OTHER ENTITY, AND IS NOT FEDERALLY INSURED
BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE
BOARD, OR ANY OTHER AGENCY.
Issuer: Distributor:
IDS Certificate Company American Express
IDS Tower 10 Financial Advisors Inc.
Minneapolis, MN 55440-0010 IDS Tower 10
1-800-437-3133 (toll free) or Minneapolis, MN 55440-0010
(612) 671-3800 (Minneapolis/
St. Paul area)
Selling Agents:
American Express
TTY numbers: Bank International
1-800-846-4293 (toll free) or American Express Tower
(612) 671-1630 (Minneapolis/ World Financial Center
St. Paul area) New York, NY 10285-2300
Coutts & Co (USA) International
421 North Rodeo Drive
Penthouse 1
Beverly Hills, CA 90210-4539
<PAGE>
PAGE 126
Where to get information about the Issuer
The Issuer is subject to the reporting requirements of the
Securities Exchange Act of 1934. Reports and other information on
the Issuer are filed with the Securities and Exchange Commission
(SEC). Copies can be obtained from the Public Reference Section of
the SEC, 450 5th St., N.W., Washington, D.C. 20549, at prescribed
rates. Or you can inspect and copy information in person at the
SEC's Public Reference Section and at the following regional
offices:
Northeast Regional Office
7 World Trade Center, Suite 1300
New York, NY 10048
Midwest Regional Office
Northwestern Atrium Center
500 West Madison St., Suite 1400
Chicago, IL 60611
Pacific Regional Office
5670 Wilshire Blvd., 11th Floor
Los Angeles, CA 90036
Initial interest and participation rates
The Issuer guarantees return of your principal. The interest on
your certificate is linked to stock market performance as measured
by the Standard & Poor's 500 Stock Index (S&P 500 Index) as
explained under "About the certificate," below.
Here are the interest rates and market participation percentages in
effect on the date of this prospectus, April 24, 1996:
Maximum return Market participation percentage Minimum interest
10% 100% (full) None
10% 25% (partial) Currently 3.25%
These rates may or may not be in effect when you apply to purchase
your certificate. For your first term, if you choose the partial
participation option for your certificate, your minimum interest
rate will be between 2.75% and 3.75%. Rates for later terms are
set at the discretion of the Issuer and may differ from the rates
shown here. We reserve the right to issue other securities with
different provisions.<PAGE>
PAGE 127
Table of contents
About the certificate
Investment amounts p
Face amount and principal p
Certificate term p
Value at maturity p
Receiving cash before end of the term p
Interest p
Promotions and pricing flexibility p
Historical data on the S&P 500 Index p
Calculation of return p
About the S&P 500 Index p
Opportunities at the end of a term p
How to invest and withdraw funds
Buying your certificate p
Full and partial withdrawals p
Other full and partial withdrawal policies p
Transfers to other accounts p
Transfer of ownership p
For more information p
Taxes on your earnings
Foreign investors p
How your money is used and protected
Invested and guaranteed by the Issuer p
Regulated by government p
Backed by our investments p
Investment policies p
How your money is managed
Relationship between the Issuer
and American Express Financial Corporation p
Capital structure and certificates issued p
Investment management and services p
Distribution p
About American Express Bank International and Coutts p
About American Express Service Corporation p
Employment of other American Express affiliates p
Directors and officers p
Auditors p
Annual Financial information
Summary of selected financial information p
Management's discussion and analysis of financial
condition and results of operations p
Report of independent auditors p
Financial statements p
Notes to financial statements p
<PAGE>
PAGE 128
About the certificate
Investment amounts
You may purchase the IDS Stock Market Certificate with a single
investment of at least $1,000 but not more than $1 million (unless
you receive prior authorization from IDSC to invest more) payable
in U.S. currency. You may also make additional lump-sum
investments in any amount at the end of any term as long as your
total amount paid in is not more than the $1 million (unless you
receive prior authorization from IDSC to invest more).
Face amount and principal
The face amount of your certificate is the amount of your initial
investment. Your principal is the value of your certificate at the
beginning of each subsequent term. Your principal is guaranteed by
the Issuer. It consists of the amount you actually invest plus
interest and any additional investment you make less withdrawals,
penalties and any interest paid to you in cash.
For example: Assume your initial investment (face amount) of
$10,000 has earned a return of 7.25%. Interest is credited to your
account at the end of the term. You have not taken any interest as
cash, or made any withdrawals. You have invested an additional
$2,500 prior to the beginning of the next term. Your principal for
the next term will equal:
$10,000.00 Face Amount (initial investment)
plus 725.00 Interest credited to your account at the
end of the term
plus 5.00 Interim interest (See "Interim interest")
minus ($0.00) Interest paid to you in cash
plus 2,500.00 Additional investment to your certificate
minus ($0.00) Withdrawals and applicable penalties
$13,230.00 Principal at the beginning of the next
term.
Certificate term
Your first certificate term is a 12-month period that begins on the
Wednesday after your application is accepted and ends the Tuesday
before the one-year anniversary of its acceptance. For example, if
your application is accepted on a Wednesday, your first term would
begin the next Wednesday. Your certificate will earn interest at
the interim interest rate then in effect until the term begins. It
will not earn any participation interest until the term begins. If
you choose to continue to receive participation interest,
subsequent terms are 12-month periods that begin on the Wednesday
following the 14-day grace period at the end of the prior 12-month
term. You may begin your next term on any Wednesday during the 14-
day period by providing prior written instructions to the Issuer.
If you choose to receive fixed interest, subsequent terms will be
up to 12 months as described in "Fixed interest" under "Interest"
below.<PAGE>
PAGE 129
Value at maturity
Your certificate matures after 14 terms, and you will receive a
check for its value. At maturity, the value of your certificate
will be the total of your actual investments, plus credited
interest not paid to you in cash, less any withdrawals and
withdrawal penalties. Certain other fees may apply.
Receiving cash before end of the term
If you need money before your certificate term ends, you may
withdraw part or all of its value at any time, less any penalties
that apply. Procedures for withdrawing money, as well as
conditions under which penalties apply, are described in "Full and
partial withdrawals" under "How to invest and withdraw funds."
Interest
You may select from two types of participation interest for your
first term. The two types are 1) full participation, or 2) partial
participation together with minimum interest. Both of these
options have an upper limit which is the maximum annual return
explained below. After your first term, you may choose not to
participate in any market movement and receive a fixed rate of
interest.
Full participation interest: With this option you participate 100%
in any percentage increase in the S&P 500 Index up to the maximum
return. You earn interest only if the value of the S&P 500 Index
is higher on the last day of your term than it was on the first day
of your term. Thus, your return is linked to stock market
performance. The S&P 500 Index is frequently used to measure the
relative performance of the stock market. For a more detailed
discussion of the S&P 500 Index, see "About the S&P 500 Index."
Partial participation and minimum interest: This option allows you
to participate in a certain part (market participation rate) of any
increase in the S&P 500 Index together with a rate of interest
guaranteed by IDSC in advance for each term (minimum interest).
Your return is composed of two parts:
1. A percentage of any increase in the S&P 500 Index, and
2. A rate of interest guaranteed by IDSC in advance for each
term.
Together, they cannot exceed the maximum return.
If you choose the partial participation option for your first term,
the minimum interest paid on your certificate will be between 2.75%
and 3.75%
The market participation rate and the minimum interest rate on the
date of this prospectus are listed on the inside cover under
"Initial interest and participation rates."
Fixed interest: After your first term, this option allows you to
stop participating in the market entirely for one or more terms.
You may choose to receive a fixed rate of interest for any term
after the first term. During the term when you are receiving fixed<PAGE>
PAGE 130
interest, you can change from your fixed interest selection to
again participate in the market. If you make the change from fixed
interest to participation interest, your next term would begin on
the Wednesday following our receipt of notice of your new
selection. In this way, you may have a term (during which you
would earn fixed interest) that is less than 12 months. You may
not change from participation interest to fixed interest during a
term.
Maximum annual return: This is the cap, or upper limit, of your
return. Your total return including both participation and minimum
interest for a term for which you have chosen participation
interest will be limited to this maximum return percentage.
Determining the S&P 500 Index value: The stock market closes at 3
p.m. Central time and the S&P 500 Index value is available at
approximately 4:30 p.m. This is the value we currently use to
determine participation interest. Occasionally, Standard & Poor's
Corporation (S&P) makes minor adjustments to the closing value
after 4:30 p.m. and the value we use may not be exactly the one
that is published the next business day. In the future, we may use
a later time cut-off if it becomes feasible to do so. If the stock
market is not open or the S&P 500 Index is unavailable as of the
last day of your term, the preceding business day for which a value
is available will be used instead. Each Tuesday's closing value of
the S&P 500 Index is used for establishing the term start and the
term end values each week.
Interim interest: When we accept your application, we pay interim
interest to your account for the time before your first term
begins. We also pay interim interest for the 14-day period between
terms unless you write to ask us to begin your next term earlier.
You may withdraw this interest in cash at any time before it
becomes part of your certificate's principal without withdrawal
penalty. If it is not withdrawn, the interest will become part of
your certificate's principal at the start of the next succeeding
term. For example, the interest you earn between the end of the
first and the beginning of the second term will become part of the
principal at the start of your third term. Interim interest rates
for the time before your first term begins will be within a range 0
to 100 basis points (0% to 1%) above the average interest rate
published for 12-month certificates of deposit in the BANK RATE
MONITOR Top 25 Market AverageTM (the BRM Average), North Palm
Beach, FL 33408. If the BRM Average is no longer publicly
available or feasible to use, IDSC may use another, similar index
as a guide for setting rates.
The BANK RATE MONITOR is a weekly magazine published in North Palm
Beach, FL 33408 by Advertising News Service Inc., an independent
national news organization that collects and disseminates
information about bank products and interest rates. Advertising
News Service has no connection with the Issuer, American Express
Financial Corporation or any of their affiliates.
The BRM Average is an index of rates and annual effective yields
offered on various length certificates of deposit by large banks
and thrifts in 25 metropolitan areas. The frequency of compounding<PAGE>
PAGE 131
varies among the banks and thrifts. Certificates of deposit in the
BRM Average are government insured fixed-rate time deposits.
The BANK RATE MONITOR may be available in your local library. To
obtain information or current BRM Average rates, call the Client
Service Organization at the telephone numbers listed on the back
cover.
Earning interest: Participation interest is calculated, credited
and compounded at the end of your certificate term. Minimum
interest accrues daily and is credited and compounded at the end of
your certificate term. Fixed interest accrues and is credited
daily and compounds at the end of your term. Both minimum and
fixed interest are calculated on a 30-day month and 360-day year
basis. Interim interest accrues and is credited daily and
compounds at the end of your term immediately following the period
in which interim interest is credited.
Rates for future periods: After the initial term, the maximum
return, market participation percentage or minimum interest rate on
your certificate may be greater or less than those shown on the
front of this prospectus. In setting future interest rates, a
primary consideration will be the prevailing investment climate.
Rates are reviewed weekly, and we have complete discretion as to
what interest rate will be declared.
To find out what your certificate's new maximum return, market
participation percentage and minimum interest rate will be for your
next term, please consult:
o Your American Express Bank International (AEBI) relationship
manager.
o Your Coutts & Co (USA) International (Coutts) relationship
officer.
o The Issuer's Client Service Organization at the telephone
numbers listed on the back cover.
Promotions and pricing flexibility
From time to time, the Issuer may sponsor or participate in
promotions involving one or more of the certificates and their
respective terms. For example, we may offer different rates to new
clients, to existing clients, or to individuals who purchase or use
products or services offered by American Express Financial Advisors
Inc. or its affiliates. These promotions will generally be for a
specified period of time. We also may offer different rates based
on your amount invested.
Historical Data on the S&P 500 Index
The following chart illustrates the month-end closing values of the
index from Dec. 31, 1983 through Feb. 28, 1996. The values of the
S&P 500 Index are reprinted with the permission of S&P.
<PAGE>
PAGE 132
S&P 500 Index values - December 1983 to February 1996
400
300 Chart shows closing values of the S&P from above 100 in
1994 to end near 500 in Feb. 1996
200
____S&P 500
100
84 85 86 87 88 89 90 91 92 93 94 95 96
S&P 500 Index Average Annual Return
Beginning date Period held Average annual
Dec. 31, in years return
___________________________________________________________________
1985 10 %
1990 5
1994 1
The next chart illustrates, on a moving 12-month basis, the price
return of the S&P 500 Index measured for every 12-month period
beginning with the period ended Dec. 31, 1984. The price return is
the percentage return for each period using month-end closing
prices of the S&P 500 Index. Dividends and other distributions on
the securities comprising the S&P 500 Index are not included in
calculating the price return.
S&P 500 Index - December 1984 to February 1996
40%
Chart shows 12-month Moving Price Return of the
S&P from a high of 40% to a low of -20%
20%
0%
- -20%
85 86 87 88 89 90 91 92 93 94 95 96
Using the same data on price returns described above, the next
graph expands on the information in the preceding chart by
illustrating the distribution of all of the 12-month price returns
of the S&P 500 Index beginning with the 12-month period ending Dec.
31, 1984. The graph also shows the number of times these price
returns fell within certain ranges.<PAGE>
PAGE 133
S&P 500 Index - December 1984 to February 1996
20
Chart shows the distribution of all of the 12-month
price returns of the S&P 500 from 12/1/84 through
15 2/28/96 with a high of just over 20 and a low between
0 and 5
10
5
- -15% -10 -5 0 5 10 15 20 25 30
The last chart illustrates, on a moving weekly basis, the actual
12-month return of the IDS Stock Market Certificate at full and
partial participation compared to the price return of the NYSE
Composite IndexR through October 1992 and the S&P 500 Index after
October 1992. For non-guaranteed funds received before Nov. 3,
1992, and guaranteed funds received before Nov. 4, 1992, IDS Stock
Market Certificate participation interest was based on the NYSE
Composite IndexR rather than the S&P 500 Index.
<TABLE><CAPTION>
Actual 12-month return 1/22/91 to 2/8/96
<S> <C>
30%
25%
20% Chart shows actual returns of the certificate at full
and 25% participation with the full participation
15% generally tracking the market indexes over the period
and 25% level of participation tracking at the 25%
10% level of return.
5% ----Market Index
****Stock Market Full Participation
0% ....Stock Market 25% Participation
1/91 4/91 7/91 10/91 1/92 4/92 7/92 10/92 1/93 4/93 7/93 10/93 2/94 4/94 7/94 10/94 2/95
</TABLE>
The NYSE Composite IndexR is a registered service mark of the New
York Stock Exchange, Inc. (NYSE) and is a composite covering price
movements of all common stocks listed on the NYSE. Because the IDS
Stock Market Certificate was first available on Jan. 24, 1990, the
performance reflects the returns on the one-year anniversary date,
falling on a Wednesday, of each of the weeks shown.
The recent historical experience of an index should not be taken as
an indication of future performance of the stock market or the
certificate. No assurance can be given that an index will not
decline or that certificate holders will receive interest on their
accounts beyond any minimum interest or fixed interest selected.<PAGE>
PAGE 134
Calculation of return
The increase or decrease in the S&P 500 Index, as well as the
actual return paid to you, is calculated as follows:
Rate of return on S&P 500 Index
Term ending value of S&P 500 Index minus
Term beginning value of S&P 500 Index divided by
Term beginning value of S&P 500 Index equals
Rate of return on S&P 500 Index
The actual return paid to you will depend on your interest
participation selection.
For example, assume:
Term ending value of S&P 500 Index 458
Term beginning value of S&P 500 Index 422
Maximum return 10%
Minimum return 3.25%
Partial participation rate 25%
458 Term ending value of S&P 500 Index
minus 422 Term beginning value of S&P 500 Index
equals 36 Difference between beginning and ending values
36 Difference between beginning and ending values
divided by 422 Term beginning value of S&P 500 Index
equals 8.53% Percent increase - full participation return
8.53% Percent increase or decrease
times 25.00% Partial participation rate
equals 2.13%
plus 3.25% 3.25% minimum interest rate
equals 5.38% Partial participation return
In both cases in the example, the return would be less than the 10%
maximum.
Maximum Return and Partial Participation Minimum Rate History - The
following table illustrates the maximum annual returns and partial
participation minimum rates that have been in effect since the
Stock Market Certificate was introduced.
Partial
Maximum participation
Start of Term annual return minimum rate
Jan. 24, 1990 18.00% 5.00%
Feb. 5, 1992 18.00 4.00
May 13, 1992 15.00 4.00
Sept. 9, 1992 12.00 3.00
Nov. 11, 1992 10.00 2.50
Nov. 2, 1994 10.00 2.75
April 26, 1995 12.00 3.75
Jan. 17, 1996 10.00 3.25
<PAGE>
PAGE 135
Examples: To help you understand the way this certificate works,
here are some hypothetical examples. The following are three
different examples of market scenarios and how they affect the
certificate's return. Assume for all examples that you purchased
the certificate with a $10,000 original investment. Also assume
that the partial participation rate is 25%, the minimum interest
rate for partial participation is 3.25%, and the maximum total
return for full and partial participation is 10%.
<TABLE><CAPTION>
- ------------------------------------------------------------------------------------------
1. If the Market and the S&P 500 Index value rise
Week 1/Wed Week 52/Tues
S&P 500 S&P 500
Index 425 8% increase in the S&P 500 Index Index 459
<S> <C>
Full participation interest Partial participation interest and minimum interest
$10,000 Original investment $10,000 Original investment
+ 800 (8% x $10,000) + 325 3.25% (minimum interest rate) x $10,000
Participation interest + 200 25% x (8% x $10,000) participation interest
$10,800 Ending balance $10,525 Ending balance
(8% total return) (5.25% total return)
- ------------------------------------------------------------------------------------------
2. If the Market and the S&P 500 Index value fall
Week 1/Wed Week 52/Tues
S&P 500 S&P 500
Index 425 4% decrease in the S&P 500 Index Index 408
Full participation interest Partial participation interest and minimum interest
$10,000 Original investment $10,000 Original investment
+ 0 Participation interest + 325 3.25% (Minimum interest rate) x $10,000
$10,000 Ending balance + 0 Participation interest
(0% total return) $10,325 Ending balance
(3.25% total return)
- ----------------------------------------------------------------------------------------
3. If the Market and the S&P 500 Index value rise above maximum return
Week 1/Wed Week 52/Tues
S&P 500 S&P 500
Index 425 16% increase in the S&P 500 Index Index 493
Full Participation interest Partial participation interest and minimum interest
$10,000 Original investment $10,000 Original investment
+ 1,000 (10% x $10,000) + 325 3.25% (Minimum interest rate) x $10,000
Maximum interest + 400 (25% x 16% x $10,000) Participation interest
$11,000 Ending balance $10,725 Ending balance
(10% Total return) (7.25% total return)
</TABLE>
About the S&P 500 Index
The description in this prospectus of the S&P 500 Index including
its make-up, method of calculation and changes in its components
are derived from publicly available information regarding the S&P
500 Index. The Issuer does not assume any responsibility for the
accuracy or completeness of such information.
The S&P 500 Index is composed of 500 common stocks, most of which
are listed on the New York Stock Exchange. The S&P 500 Index is
published by S&P and is intended to provide an indication of the
pattern of common stock movement. S&P chooses the 500 stocks to be
included in the S&P 500 Index with the aim of achieving a
distribution by broad industry groupings that approximates the
distribution of these groupings in the common stock population of
the New York Stock Exchange. Changes in the S&P 500 Index are
reported daily in the financial pages of many major newspapers.
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"Standard & Poor'sR", "S&PR", "S&P 500R", "Standard & Poor's 500",
and "500" are trademarks of McGraw-Hill, Inc. and have been
licensed for use by the Issuer. The certificate is not sponsored,
endorsed, sold or promoted by S&P. S&P makes no representation or
warranty, express or implied, to the owners of the certificate or
any member of the public regarding the advisability of investing in
securities generally or in the certificate particularly or the
ability of the S&P 500 Index to track general stock market
performance. S&P's only relationship to the Issuer is the
licensing of certain trademarks and trade names of S&P and of the
S&P 500 Index which is determined, composed and calculated by S&P
without regard to the Issuer or the certificate. S&P has no
obligation to take the needs of the Issuer or the owners of the
certificate into consideration in determining, composing or
calculating the S&P 500 Index. S&P is not responsible for and has
not participated in the determination of the timing of, prices at,
or quantities of the certificate to be issued or in the
determination or calculation of the equation by which the
certificate is to be converted into cash. S&P has no obligation or
liability in connection with the administration, marketing or
trading of the certificate.
S&P does not guarantee the accuracy and/or the completeness of the
S&P 500 Index or any data included therein and S&P shall have no
liability for any errors, omissions, or interruptions therein. S&P
makes no warranty, express or implied, as to the results to be
obtained by the Issuer, owners of the certificate, or any person or
entity from the use of the S&P 500 Index or any data included
therein. S&P makes no express or implied warranties, and expressly
disclaims all warranties of merchantability or fitness for a
particular purpose or use with respect to the S&P 500 Index or any
data included therein. Without limiting any of the foregoing, in
no event shall S&P have any liability for any special, punitive,
indirect, or consequential damages (including lost profits), even
if notified of the possibility of such damages.
If for any reason the S&P 500 Index were to become unavailable or
not reasonably feasible to use, we would use a comparable stock
market index for determining participation interest. If this were
to occur, you would be sent a notice indicating the comparable
index that will be used and be given the option to surrender your
certificate, if desired, and receive your principal, without being
assessed a surrender charge.
Opportunities at the end of a term
Grace period: When your certificate term ends, you have 14 days
before a new term automatically begins. During this 14-day grace
period you can:
o change your interest selection,
o add money to your certificate,
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o withdraw part or all of your money without a withdrawal
penalty or loss of interest, or
o receive your interest in cash.
Fixed interest only: The grace period does not apply if you made
the change from fixed interest back to participation interest
during a term as discussed in "Fixed interest" under "Interest"
above. Instead, your new 12-month term will begin on the Wednesday
following our receipt of your notice of your new interest
selection.
New term: If you do not make changes, your certificate will
continue with your current selections when the new term begins 14
days later. You will earn interim interest during this 14-day
grace period. If you don't want to wait 14 days before starting
your next market participation term, you must give us written
instructions before your current term ends. Or, you may phone in
your instructions and follow up the call with written verification.
You can tell us to start your next term on any Wednesday during the
grace period following the date on which we receive your notice.
Your notice may also tell us to change your interest selection, add
to your certificate or withdraw part of your money. Term end
notification cannot be sent in advance because indexing information
and interest (if any) are included. Any additional payments
received during the current term will be applied at the end of the
current term. By starting your new term early and waiving the 14-
day grace period, you are choosing to start your next term without
knowing the ending value of your current term.
How to invest and withdraw funds
Buying your certificate
An AEBI relationship manager or Coutts client relationship officer
will help you fill out and submit an application to open an account
with us and purchase a certificate. We will process the
application at our corporate offices in Minneapolis. When your
application is accepted and we have received your initial
investment, we will send you a confirmation showing the acceptance
date, the date your term begins and the interest selection you have
made detailing your market participation percentage and/or the
guaranteed minimum interest rate for your first term. After your
term begins, we will send you notice of the value of the S&P 500
Index on the day your term began. The rates in effect on the date
we accept your application are the rates that apply to your
certificate. See "Purchase policies" below.
IMPORTANT: When opening an account, you must provide the Issuer
with a Form W-8 or approved substitute. See "Taxes on your
earnings."
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Purchase policies:
The Issuer has the authority to determine whether to accept an
application and sell a certificate.
How to make additional investments at term end
By wire
If you have an established account, you may wire money to:
Norwest Bank Minneapolis
Routing No. 091000019
Minneapolis, MN
Attn: Domestic Wire Dept.
Give these instructions: Credit IDS Account #00-29-882 for
personal account # (your account number) for (your name).
If this information is not included, the order may be rejected and
all money received less any costs IDSC incurs will be returned
promptly.
o Minimum amount you may wire: $1,000
o Wire orders can be accepted only on days when your bank,
American Express Financial Corporation, IDSC and Norwest Bank
Minneapolis are open for business.
o Purchases made by wire are accepted by American Express
Financial Corporation only from banks located in the United
States.
o Wire purchases are completed when wired payment is received
and we accept the purchase.
o Wire purchases are not sent until the next business day.
o Wire investments must be received and accepted in the
Minneapolis headquarters on a business day before 3 p.m.
Central time to be credited that day. Otherwise your purchase
will be processed the next business day.
o The Issuer, American Express Financial Corporation (AEFC), its
subsidiaries, AEBI, and Coutts are not responsible for any
delays that occur in wiring funds, including delays in
processing by the bank.
o You must pay any fee the bank charges for wiring.
Full and partial withdrawals
You may withdraw your certificate for its full value or make a
partial withdrawal of $100 or more at any time. However:
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o Full and partial withdrawals of principal during a term are
subject to penalties, described below.
o You may not make a partial withdrawal if it would reduce your
certificate balance to less than $1,000. If you request such
a withdrawal, we will contact you for revised instructions.
Penalties for withdrawal during a term: If you withdraw money
during a term, you will pay a penalty of 2% of the principal
withdrawn. (The 2% penalty is waived upon death of the certificate
holder.)
When you request a full or partial withdrawal during a term, we pay
you from the principal of your certificate.
Loss of interest: If you make a withdrawal at any time other than
at the end of the term, you will lose interest accrued on the
withdrawal amount since minimum and participation interest is
credited only at the end of a term. However, accrued fixed and
interim interest will be paid to the date of the withdrawal.
Following are examples describing a $2,000 withdrawal during a term
for participation and fixed interest:
Participation interest
Account balance $10,000.00
Interest (interest is credited at 0.00
the end of the term)
Withdrawal of principal ( 2,000.00)
2% withdrawal penalty (40.00)
Balance after withdrawal. $ 7,960.00
You will forfeit any accrued
interest on the withdrawal amount.
Fixed interest
Account balance $10,000.00
Interest credited to date 100.00
Withdrawal of credited interest (100.00)
Withdrawal of principal (1,900.00)
2% withdrawal penalty (on $1,900 (38.00)
principal withdrawn)
Balance after withdrawal. $ 8,062.00
Other full and partial withdrawal policies:
o If you request a partial or full withdrawal of a certificate
recently purchased or added to by a check or money order that
is not guaranteed, we will wait for your check to clear.
Please expect a minimum of 10 days from the date of your
payment before the Issuer mails a check to you. (A check may
be mailed earlier if your bank provides evidence that your
check has cleared.)
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o If your certificate is pledged as collateral, any withdrawal
will be delayed until we get approval from the secured party.
o Any payments to you may be delayed under applicable rules,
regulations or orders of the SEC.
Transfers to other accounts
You may transfer part or all of your certificate to other IDSC
certificates available through AEBI or Coutts.
Two ways to request a withdrawal or transfer
1
By phone
Your AEBI relationship manager or Coutts client relationship
officer will assist you with this transaction. You may also call
the Client Service Organization between 8 a.m. and 6 p.m. your
local time at the telephone numbers listed on the back cover.
o Maximum phone request: $50,000
o Transfers into an American Express Financial Advisors Inc.
account with the same ownership.
o A telephone withdrawal request will not be allowed within 30
days of a phoned-in address change.
o We will honor any telephone requests believed to be authentic
and will use reasonable procedures to confirm that they are.
This includes asking identifying questions and tape recording
telephone calls. So long as reasonable procedures are
followed, neither IDSC nor AEFC or its subsidiaries will be
liable for any loss resulting from fraudulent requests.
You may request that telephone withdrawals not be authorized from
your account by writing the Client Service Organization.
2
By mail
Your AEBI relationship manager or Coutts client relationship
officer will assist you with this transaction. You may also send
your name, account number and request for a withdrawal or transfer
to:
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Regular mail:
American Express Financial Advisors Inc.
Client Service Organization
IDS Tower 10
Minneapolis, MN 55440-0010
Express mail:
American Express Financial Advisors Inc.
Client Service Organization
733 Marquette Ave.
Minneapolis, MN 55402
Written requests are required for:
o Transactions over $50,000
o Transfers to another American Express Financial Advisors Inc.
account with different ownership. (All current registered
owners must sign the request.)
Two ways to receive payment when you withdraw funds
1
By regular or express mail
o Mailed to address on record; please allow seven days for
mailing
o Payable to name(s) you requested
o For express mail, you will pay charges that vary depending on
the courier you select. For a partial withdrawal leaving a
remaining balance of more than $1,000, these charges will be
deducted from the remaining balance. If the remaining balance
is less than $1,000, or if it is a full withdrawal, charges
are deducted from proceeds of the withdrawal.
2
By wire
o Minimum wire withdrawal: $1,000
o Request that money be wired to your bank
o Bank account must be in same ownership as the Issuer's account
o Pre-authorization required. Complete the bank wire
authorization section in the application or use a form
supplied by your AEBI relationship manager or Coutts client
relationship officer. All registered owners must sign.
o A service fee, if any, may be deducted from your balance (for
partial withdrawals) or from the proceeds of a full
withdrawal.
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Transfer of ownership
The Issuer will transfer ownership of your certificate upon written
notification to the Client Service Organization. The Certificate
is not negotiable.
For more information
For information on purchases, withdrawals, exchanges, transfers of
ownership, proper instructions and other service questions
regarding your certificate, please consult your AEBI relationship
manager or Coutts client relationship officer, or call the Issuer's
toll free client service number listed on the back cover.
Taxes on your earnings
Foreign investors
If you are not a citizen or resident of the United States, you must
supply the Issuer with Form W-8, Certificate of Foreign Status when
you purchase your certificate, and you must resupply it every three
years. You must also supply both a current mailing address and an
address of foreign residency, if different. The Issuer will not
accept purchases of certificates by nonresident aliens without an
appropriately certified Form W-8 (or approved substitute). Also,
if you do not supply Form W-8 you will be subject to backup
withholding on interest payments and withdrawals.
It is most likely that the interest on the certificate is
"portfolio interest" as defined in U.S. Internal Revenue Code
Section 871(h) if earned by a nonresident alien. However, if the
certificate is treated as a contingent debt instrument (CDI), part
of the earned income may be treated as capital gain instead of
portfolio interest. Even though your interest income or capital
gain is not taxed by the U.S. government, it will be reported at
year end to you and to the U.S. government on a Form 1042S, Foreign
Person's U.S. Source Income Subject to Withholding. The United
States participates in various tax treaties with foreign countries,
which provide for sharing of tax information.
Estate tax: If you are a nonresident alien and you die while
owning a certificate, the Issuer will need a statement from persons
the Issuer believes are knowledgeable about your estate. The
statement must be in a form satisfactory to the Issuer and must
tell us that, on your date of death, your estate did not include
any property in the United States for U.S. estate tax purposes. If
we do not receive the statement, we generally will not take action
regarding your certificate until we receive a transfer certificate
from the IRS. In general, a transfer certificate requires the
opening of an estate in the United States and provides assurance
that the IRS will not claim your IDS certificate to satisfy estate
taxes.
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IMPORTANT: This information is a brief and selective summary of
certain federal tax rules that apply to this certificate. Tax
matters are highly individual and complex, and you should consult a
qualified tax adviser about your personal situation.
How your money is used and protected
Invested and guaranteed by the Issuer
The IDS Stock Market Certificate is issued and guaranteed by the
Issuer, a wholly owned subsidiary of AEFC. We are by far the
largest issuer of face amount certificates in the United States,
with total assets of more than $___ billion and a net worth in
excess of $___ million on Dec. 31, 1995.
We back our certificates by investing the money received and
keeping the invested assets on deposit. Our investments generate
interest and dividends, out of which we pay:
o interest to certificate owners
o various expenses, including taxes, fees to AEFC for advisory
and other services and distribution fees to American Express
Financial Advisors Inc., and American Express Service
Corporation (AESC).
For a review of significant events relating to our business, see
"Management's discussion and analysis of financial condition and
results of operations." Our certificates are not rated by a
national rating agency.
Most banks and thrifts offer investments known as certificates of
deposit (CDs) that are similar to our certificates in many ways.
Early withdrawal of bank CDs often results in penalties. Banks and
thrifts generally have federal deposit insurance for their deposits
and lend much of the money deposited to individuals, businesses and
other enterprises. Other financial institutions and some insurance
companies may offer investments with comparable combinations of
safety and return on investment.
Regulated by government
Because the IDS Stock Market Certificate is a security, its offer
and sale are subject to regulation under federal and state
securities laws. (It is a face-amount certificate--not a bank
product, an equity investment, a form of life insurance or an
investment trust.)
The federal Investment Company Act of 1940 requires us to keep
investments on deposit in a segregated custodial account to protect
all of our outstanding certificates. These investments back the
entire value of your certificate account. Their amortized cost
must exceed the required carrying value of the outstanding
certificates by at least $250,000. As of Dec. 31, 1995, the
amortized cost of these investments exceeded the required carrying
value of our outstanding certificates by more than $___ million.
<PAGE>
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Backed by our investments
Our investments are varied and of high quality. This was the
composition of our portfolio as of Dec. 31, 1995:
Type of investment Net amount invested
Corporate and other bonds 31%
Government agency bonds 27
Preferred stocks 23
Mortgages 9
Municipal bonds 5
Cash and cash equivalents 5
More than 95% of our securities portfolio (bonds and preferred
stocks) is rated investment grade. For additional information
regarding securities ratings, please refer to Note 3B in the
financial statements.
Most of our investments are on deposit with American Express Trust
Company (formerly IDS Trust Company), Minneapolis, although we also
maintain separate deposits as required by certain states. American
Express Trust Company is a wholly owned subsidiary of AEFC. Copies
of our Dec. 31, 1995 schedule of Investments in Securities of
Unaffiliated Issuers are available upon request. For comments
regarding the valuation, carrying values and unrealized
appreciation (depreciation) of investment securities, see Notes 1,
2 and 3 to the financial statements.
Investment policies
In deciding how to diversify the portfolio-- among what types of
investments in what amounts--the officers and directors of the
Issuer use their best judgment, subject to applicable law. The
following policies currently govern our investment decisions:
Purchasing securities on margin: We will not purchase any
securities on margin or participate on a joint basis or a joint-
and-several basis in any trading account in securities.
Commodities: We have not and do not intend to purchase or sell
commodities or commodity contracts.
Underwriting: We do not intend to engage in the public
distribution of securities issued by others. However, if we
purchase unregistered securities and later resell them, we may be
considered an underwriter under federal securities laws.
Borrowing money: From time to time we have established a line of
credit if management believed borrowing was necessary or desirable.
While a line of credit does not currently exist, it may be
established again in the future. We may pledge some of our assets
as security. We may occasionally use repurchase agreements as a
way to borrow money. Under these agreements, we sell debt
securities to our lender, and repurchase them at the sales price
plus an agreed-upon interest rate within a specified period of
time.<PAGE>
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Real estate: We may invest directly in real estate, though we have
not generally done so in the past. We do invest in mortgage loans.
Lending securities: We may lend some of our securities to broker-
dealers and receive cash equal to the market value of the
securities as collateral. We invest this cash in short-term
securities. If the market value of the securities goes up, the
borrower pays us additional cash. During the course of the loan,
the borrower makes cash payments to us equal to all interest,
dividends and other distributions paid on the loaned securities.
We will try to vote these securities if a major event affecting our
investment is under consideration.
When-issued securities: Most of our investments are in debt
securities, some of which are purchased on a when-issued basis. It
may take as long as 45 days or more before these securities are
issued and delivered to us. We generally do not pay for these
securities or start earning on them until delivery. We have
established procedures to ensure that sufficient cash is available
to meet when-issued commitments.
Financial Transactions: We buy or sell various types of options
contracts for hedging purposes or as a trading technique to
facilitate securities purchases or sales. We buy interest rate
caps for hedging purposes. These pay us a return if interest rates
rise above a specified level. IDSC may enter into other financial
transactions, including futures and other derivatives, for the
purpose of managing the interest rate exposures associated with
IDSC's assets or liabilities. Derivatives are financial
instruments whose performance is derived, at least in part, from
the performance of an underlying asset, security or index. A small
change in the value of the underlying asset, security or index may
cause a sizable gain or loss in the fair value of the derivative.
Illiquid securities: A security is illiquid if it cannot be sold
in the normal course of business within seven days at approximately
its current market value. Some investments cannot be resold to the
U.S. public because of their terms or government regulations. All
securities, however, can be sold in private sales, and many may be
sold to other institutions and qualified buyers or on foreign
markets. IDSC's investment advisor will follow guidelines
established by the board and consider relevant factors such as the
nature of the security and the number of likely buyers when
determining whether a security is illiquid. No more than 15% of
IDSC's investment portfolio will be held in securities that are
illiquid. In valuing its investment portfolio to determine this
15% illiquid securities limit, IDSC will use statutory accounting.
This means that, for this purpose, the portfolio will be valued in
accordance with applicable investment statutes rather than
generally accepted accounting principles.
Restrictions: There are no restrictions on concentration of
investments in any particular industry or group of industries or on
rates of portfolio turnover.
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How your certificate is managed
Relationship between the Issuer and AEFC
The Issuer was originally organized as Investors Syndicate of
America, Inc., a Minnesota corporation, on Oct. 15, 1940, and began
business as an issuer of face amount investment certificates on
Jan. 1, 1941. The company became a Delaware corporation on Dec.
31, 1977, and changed its name to IDS Certificate Company on April
2, 1984.
Before the Issuer was created, AEFC (formerly known as IDS
Financial Corporation) had issued similar certificates since 1894.
On Jan. 1, 1995, IDS Financial Corporation became AEFC. IDSC and
AEFC have never failed to meet their certificate payments.
During its many years in operation, AEFC has become a leading
manager of investments in mortgages and securities. As of Dec. 31,
1995, AEFC managed investments, including its own, of more than
$___ billion. American Express Financial Advisors Inc., a wholly
owned subsidiary of AEFC, provides a broad range of financial
planning services for individuals and businesses through its
nationwide network of more than 175 offices and more than 7,800
personal financial advisors. American Express Financial Advisors
Inc. financial planning services are comprehensive, beginning with
a detailed written analysis that's tailored to your needs. Your
analysis may address one or all of these six essential areas:
financial position, protection planning, investment planning,
income tax planning, retirement planning, and estate planning.
AEFC itself is a wholly owned subsidiary of American Express
Company, a financial services company with executive offices at
American Express Tower, World Financial Center, New York, NY 10285.
American Express Company is a financial services company engaged
through subsidiaries in other business including:
o travel related services (including American ExpressR Card and
Travelers Cheque operations through American Express Travel
Related Services Company, Inc. and its subsidiaries), and
o international banking services (through American Express Bank
Ltd. and its subsidiaries).
American Express Financial Advisors Inc. is not a bank, and the
securities offered by it, such as face amount certificates issued
by the Issuer, are not backed or guaranteed by any bank, nor are
they insured by the FDIC.
Capital structure and certificates issued
The Issuer has authorized, issued and has outstanding 150,000
shares of common stock, par value of $10 per share. AEFC owns all
of the outstanding shares.
As of Dec. 31, 1995, the Issuer had issued (in face amount)
$______________ of installment certificates and $______________ of
single payment certificates.
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Investment management and services
Under an Investment Advisory and Services Agreement, AEFC acts as
our investment advisor and is responsible for:
o providing investment research,
o making specific investment recommendations
o executing purchase and sale orders according to our policy of
obtaining the best price and execution.
All these activities are subject to direction and control by our
board of directors and officers. Our agreement with AEFC requires
annual renewal by our board, including a majority of directors who
are not interested persons of AEFC or the Issuer as defined in the
federal Investment Company Act of 1940.
For its services, we pay AEFC a monthly fee, equal on an annual
basis to a percentage of the total book value of certain assets
(included assets):
Advisory and Services Fee Computation:
Included Assets Percentage of Total Book Value
First $250 million 0.75%
Next 250 million 0.65
Next 250 million 0.55
Next 250 million 0.50
Any amount over $1 billion 0.45
Included assets are all assets of the Issuer except mortgage loans,
real estate, and any other asset on which we pay an advisory or
service fee.
Advisory and services fees for the past three years were:
Percentage of
Year Total fees included assets
1995 $ %
1994 $13,565,432 0.51%
1993 $15,036,091 0.50%
Estimated advisory and services fees for 1996 are $__________.
Other expenses payable by the Issuer: The Investment Advisory and
Services Agreement provides that we will pay:
o costs incurred by us in connection with real estate and
mortgages,
o taxes,
o depository and custodian fees,
o brokerage commissions,
o fees and expenses for services not covered by other agreements
and provided to us at our request, or by <PAGE>
PAGE 148
requirement, by attorneys, auditors, examiners and
professional consultants who are not officers or employees of
AEFC,
o fees and expenses of our directors who are not officers or
employees of AEFC,
o provision for certificate reserves (interest accrued on
certificate owner accounts), and
o expenses of customer settlements not attributable to sales
function.
Distribution
Under a Distribution Agreement with American Express Financial
Advisors Inc., we pay for the distribution of this certificate as
follows:
o 1.25% of the initial investment on the first day of the
certificate's term, and
o 1.25% of the certificate's reserve at the beginning of each
subsequent term,
for certificates sold through American Express Financial Advisors
Inc. or through AEBI or Coutts.
Under a Distribution Agreement with AESC, for certificates sold
through American Express Financial Services Direct, we pay AESC the
following:
o 1.00% of the initial investment on the first day or the
certificate's term, and
o 1.00% of the certificate's reserve at the beginning of each
subsequent term.
This fee is not assessed to your certificate account.
Total distribution fees paid to American Express Financial Advisors
Inc. for all series of certificates amounted to $__________ during
the year ended Dec. 31, 1995. We expect to pay American Express
Financial Advisors Inc. distribution fees amounting to $__________
during 1996.
See Note 1 to financial statements regarding deferral of
distribution fee expense.
American Express Financial Advisors Inc. pays commissions to its
financial advisors. American Express Financial Advisors Inc. and
AESC pay other selling expenses in connection with services to us.
Our board of directors, including a majority of directors who are
not interested persons of American Express Financial Advisors Inc.,
AESC or the Issuer, approved these distribution agreements.
Selling Agent Agreements with AEBI and Coutts: In turn, under
Selling Agent Agreements with AEBI and Coutts, American Express
Financial Advisors Inc. compensates each for their services as
Selling Agents of this certificate as follows:<PAGE>
PAGE 149
o AEBI is paid a fee equal to 1.0% per term of the principal
amount of each certificate for which AEBI is the selling
agent.
o Coutts is paid a fee equal to 0.80% per term of the principal
amount of each certificate for which Coutts is the selling
agent.
Coutts is compensated on certificates owned by its clients who are
former clients of AEBI. These clients must have continuously owned
a certificate since Nov. 10, 1994. Coutts is also compensated on
additional investments and exchanges made by such clients to other
certificates only to the extent that a client has the right to make
additional investments or exchanges.
American Express Financial Advisors Inc. has entered into a
consulting agreement with AEBI under which AEBI provides consulting
services related to any selling agent agreements between American
Express Financial Advisors Inc. and other Edge Act corporations.
For these services, American Express Financial Advisors Inc. pays
AEBI a fee for this certificate equal to 0.20% per term of the
principal amount of each certificate for which another Edge Act
corporation is the selling agent.
Such payments will be made quarterly in arrears.
These fees are not assessed to your certificate account.
About AEBI and Coutts
AEBI is an Edge Act corporation organized under the provisions of
Section 25(a) of the Federal Reserve Act. It is a wholly owned
subsidiary of American Express Bank Ltd. (AEBL). As an Edge Act
corporation, AEBI is subject to the provisions of Section 25(a) of
the Federal Reserve Act and Regulation K of the Board of Governors
of the Federal Reserve System (the Federal Reserve). It is
supervised and regulated by the Federal Reserve.
AEBI has an extensive international high net-worth client base that
is served by a marketing staff in New York and Florida. The
banking and financial products offered by AEBI include checking,
money-market and time deposits, credit services, check collection
services, foreign exchange, funds transfer, investment advisory
services and securities brokerage services. As of Dec. 31, 1995,
AEBI had total assets of $___ million and total equity of $___
million.
Coutts is an Edge Act corporation organized under the provisions of
Section 25(a) of the Federal Reserve Act. It is an indirect wholly
owned subsidiary of NatWest PLC. As an Edge Act corporation,
Coutts is subject to the provisions of Section 25(a) if the Federal
Reserve Act and Regulation K of the Board of Governors of the
Federal Reserve. Coutts is supervised and regulated by the Federal
Reserve.
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Although AEBI and Coutts are banking entities, the Stock Market
Certificate is not a bank product, nor is it backed or guaranteed
by AEBI or Coutts, by AEBL, by NatWest PLC or by any other bank, or
is it guaranteed or insured by the FDIC or any other federal
agency. AEBI is registered where necessary as a securities broker-
dealer.
About AESC
AESC is a wholly-owned subsidiary of American Express Travel
Related Services Inc., which in turn is a wholly-owned subsidiary
of American Express Company.
Employment of other American Express Affiliates
AEFC may employ an affiliate of American Express Company as
executing broker for our portfolio transactions only if:
o we receive prices and executions at least as favorable as
those offered by qualified independent brokers performing
similar services;
o the affiliate charges us commissions consistent with those
charged to comparable unaffiliated customers for similar
transactions; and
o the affiliate's employment is consistent with the terms of the
current Investment Advisory and Services Agreement and federal
securities laws.
Directors and officers
The Issuer's directors, chairman, president and controller are
elected annually for a term of one year. The other executive
officers are appointed by the president.
We paid a total of $______ during 1995 to directors not employed by
AEFC.
Board of directors
David R. Hubers*
Born in 1943
Director since 1987
President and chief executive officer of AEFC since 1993. Senior
vice president and chief financial officer of AEFC from 1984 to
1993.
Charles W. Johnson
Born in 1929
Director since 1989
Former vice president and group executive, Industrial Systems, with
Honeywell Inc. Retired 1989.
<PAGE>
PAGE 151
Edward Landes
Born in 1919
Director since 1984
Development consultant. Former sales manager - Supplies Division
and district manager - Data Processing Division of IBM Corporation.
Retired 1983.
John V. Luck Ph.D.
Born in 1926
Director since 1987
Former senior vice president - Science and Technology with General
Mills, Inc. Employed with General Mills Inc. since 1970. Retired
1987.
James A. Mitchell*
Born in 1941
Director since 1994
Chairman of the board of directors since 1994. Executive vice
president - marketing and products of AEFC since 1994. Senior vice
president - insurance operations of AEFC and president and chief
executive officer of IDS Life Insurance Company from 1986 to 1994.
Harrison Randolph
Born in 1919
Director since 1968
Gordon H. Ritz
Born in 1926
Director since 1968
President, Con Rad Broadcasting Corp. Director, Sunstar Foods and
Mid-America Publishing.
Stuart A. Sedlacek*
Born in 1957
Director since 1994
President since 1994. Vice president - assured assets of AEFC
since 1994. Vice president and portfolio manager from 1988 to
1994. Executive vice president - assured assets of IDS Life
Insurance Company since 1994.
*"Interested Person" of IDSC as that term is defined in Investment
Company Act of 1940.
Executive officers
Stuart A. Sedlacek
Born in 1957
President since 1994
<PAGE>
PAGE 152
Morris Goodwin Jr.
Born in 1951
Vice president and treasurer since 1989.
Vice president and corporate treasurer of AEFC since 1989. Chief
financial officer and treasurer of American Express Trust Company
from 1988 to 1989.
Timothy S. Meehan
Born in 1957
Secretary since 1995.
Secretary of AEFC and American Express Financial Advisors Inc.
since 1995. Senior counsel to AEFC since 1995. Counsel from 1990
to 1995.
Lorraine R. Hart
Born in 1951
Vice president-investments since 1994.
Vice President - insurance investments of AEFC since 1989. Vice
president, investments of IDS Life Insurance Company since 1992.
Jay C. Hatlestad
Born in 1957
Vice president and controller of IDS Certificate Company since
1994.
Manager of investment accounting of IDS Life Insurance Company from
1986 to 1994.
Bruce A. Kohn
Born in 1951
Vice president and general counsel since 1993
Counsel to AEFC since 1992. Associate counsel from 1987 to 1992.
F. Dale Simmons
Born in 1937
Vice president - Real Estate Loan Management since 1993
Vice president of AEFC since 1992. Senior portfolio manager of
AEFC since 1989. Assistant vice president from 1987 to 1992.
The Officers and Directors as a group beneficially own less than 1%
of the common stock of American Express Company.
The Issuer has provisions in its bylaws relating to the
indemnification of its officers and directors against liability, as
permitted by law. Insofar as indemnification for liabilities
arising under the Securities Act of 1933 may be permitted to
directors, officers or persons controlling the registrant pursuant
to the foregoing provisions, the registrant has been informed that
in the opinion of the SEC such indemnification is against public
policy as expressed in the Act and is therefore unenforceable.
<PAGE>
PAGE 153
Auditors
A firm of independent auditors audits our financial statements at
the close of each fiscal year (Dec. 31). Copies of our annual
financial statements (audited) and semiannual financial statements
(unaudited) are available to any certificate owner upon request.
Ernst & Young LLP, Minneapolis, has audited the financial
statements for each of the years in the three-year period ended
Dec. 31, 1995. These statements are included in this prospectus.
Ernst & Young LLP is also the auditor for American Express Company,
the parent company of AEFC and IDSC.
<PAGE>
PAGE 154
(Back cover)
Quick telephone reference
Selling Agent
American Express Bank International
Region Offices
101 East 52nd Street
29th Floor
New York, NY 10022
(212) 415-9500
1221 Brickell Avenue
8th Floor
Miami, FL 33131
(305) 350-7750
Selling Agent
Coutts & Co. (USA) International
421 North Rodeo Drive
Penthouse 1
Beverly Hills, CA 90210
(310) 858-2924
American Express Financial Advisors
IDS Stock Market Certificate
IDS Tower 10
Minneapolis, MN 55440-0010
<PAGE>
PAGE 155
PART I. CROSS REFERENCE SHEET FOR PROSPECTUS
PURSUANT TO RULE 404(c)
IDS STOCK MARKET CERTIFICATE - DIRECT MAIL
AND VARIATIONS
Item Caption in
Number Prospectus
Item 1. Forepart of the
Registration Statement
and Outside Front Cover
Page of Prospectus.
Item 2. Inside Front and Where to get information about
Outside Back Cover Pages IDSC; Table of Contents.
of Prospectus.
Item 3. Summary Informa- About the certificate
tion, Risk Factors
and Ratio of Earnings
to Fixed Charges.
Item 4. Use of Proceeds. How your money is used and
protected; Investment policies
Item 5. Determination of Not Applicable.
Offering Price.
Item 6. Dilution. Not Applicable.
Item 7. Selling Security Not Applicable.
Holders.
Item 8. Plan of How your certificate
Distribution. is managed.
Item 9. Description of About the Certificate;
Securities to Be How to invest and withdraw
Registered. funds.
Taxes on your earnings.
Item 10. Interests of Not Applicable.
Named Experts and Counsel.
<PAGE>
PAGE 156
PART I. CROSS REFERENCE SHEET FOR PROSPECTUS
PURSUANT TO RULE 404(c) (Continued)
Item Caption in
Number Prospectus
Item 11. Information with Invested and guaranteed by
Respect to the Registrant. IDSC; Regulated by government;
Relationship between IDSC and
American Express Financial
Corporation; Capital structure
and certificates issued;
Directors and Officers.
Item 12. Disclosure of Directors and Officers
Commission Position on
Indemnification for
Securities Act Liabilities.
<PAGE>
PAGE 157
IDS Stock Market Certificate
Prospectus April 24, 1996
Potential for stock market growth with safety of principal
IDS Stock Market Certificates are issued by IDS Certificate Company
(IDSC). You can purchase this certificate with a single investment
of at least $1,000 but not more than $1 million (unless you receive
prior authorization from IDSC to invest more). As long as you stay
within this limit, you can make additional investments at the end
of a term. Your principal is guaranteed by IDSC. You can
participate in any increase of the stock market based on the S&P
500 Index while protecting your principal. In addition, you decide
whether part of your return will be guaranteed by IDSC or whether
all of it will be tied to the market. You can keep your
certificate for up to 14 terms.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION, NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
This investment is backed by IDSC's investments on deposit rather
than guaranteed or insured by the government or someone else. See
"Invested and guaranteed by IDSC" and "Regulated by government"
under "How your money is used and protected."
This prospectus describes terms and conditions of your IDS Stock
Market Certificate. It contains facts that can help you decide if
the certificate is the right investment for you. Read the
prospectus before you invest and keep it for future reference. No
one has the authority to change the terms and conditions of the IDS
Stock Market Certificate as described in the prospectus, or to bind
IDSC by any statement not in it.
Issuer: Distributor:
IDS Certificate Company American Express
IDS Tower 10 Service Corporation
Minneapolis, MN 55440-0010 IDS Tower 10
1-800-AXP-SERV (toll free) Minneapolis, MN 55440-0010
TTY numbers:
1-800-710-5260 (toll free)
An American Express company<PAGE>
PAGE 158
Where to get information about IDSC
IDSC is subject to the reporting requirements of the Securities
Exchange Act of 1934. Reports and other information on IDSC are
filed with the Securities and Exchange Commission (SEC). Copies
can be obtained from the Public Reference Section of the SEC, 450
5th St., N.W., Washington, D.C. 20549, at prescribed rates. Or you
can inspect and copy information in person at the SEC's Public
Reference Section and at the following regional offices:
Northeast Regional Office
7 World Trade Center, Suite 1300
New York, NY 10048
Midwest Regional Office
Northwestern Atrium Center
500 West Madison St., Suite 1400
Chicago, IL 60611
Pacific Regional Office
5670 Wilshire Blvd., 11th Floor
Los Angeles, CA 90036
Initial interest and participation rates
IDSC guarantees return of your principal. The interest on your
certificate is linked to stock market performance as measured by
the Standard & Poor's 500 Stock Index (S&P 500 Index) as explained
under "About the certificate" below.
Here are the interest rates and market participation percentages in
effect on the date of this prospectus, April 24, 1996:
Maximum Market participation Minimum
return percentage interest
10% 100% (full) None
10% 25% (partial) currently 3.25%
These rates may or may not be in effect when you apply to purchase
your certificate. If you choose the partial participation options
for your certificate, your minimum interest rate will be between
2.75% and 3.25%. Rates for later terms are set at the discretion
of IDSC and may also differ from the rates shown here. We reserve
the right to issue other securities with different provisions.<PAGE>
PAGE 159
Contents
Table of contents
About the certificate
Investment amounts p
Face amount and principal p
Certificate term p
Value at maturity p
Receiving cash before end of the term p
Interest p
Promotions and pricing flexibility p
Historical data on the S&P 500 Index p
Calculation of return p
About the S&P 500 index p
Opportunities at the end of a term p
How to invest and withdraw funds
Buying your certificate p
Full and partial withdrawals p
Other full and partial withdrawal policies p
IRAs: special policies p
Transfer of ownership p
For more information p
Taxes on your earnings
Retirement accounts p
Gifts to minors p
Foreign investors p
How your money is used and protected
Invested and guaranteed by IDSC p
Regulated by government p
Backed by our investments p
Investment policies p
How your money is managed
Relationship between IDSC and American Express
Financial Corporation p
About American Express Service Corporation p
Capital structure and certificates issued p
Investment management and services p
Distribution p
Employment of other American Express affiliates p
Directors and officers p
Auditors p
Annual Financial information
Summary of selected financial information
Management's discussion and analysis of
financial condition and results of operations
Report of independent auditors
Financial statements
Notes to financial statements
<PAGE>
PAGE 160
About the certificate
Investment amounts
You may purchase the IDS Stock Market Certificate with a single
investment of at least $1,000 but not more than $1 million (unless
you receive prior authorization from IDSC to invest more) payable
in U.S. currency. You may also make additional lump-sum
investments in any amount at the end of any term as long as your
total amount paid in is not more than the $1 million (unless you
receive prior authorization from IDSC to invest more).
The certificate may be used as an investment for your Individual
Retirement Account (IRA). If so used, the amount of your
contribution (investment) will be subject to limitations in
applicable federal law.
Face amount and principal
The face amount of your certificate is the amount of your initial
investment. Your principal is the value of your certificate at the
beginning of each subsequent term. Your principal is guaranteed by
IDSC. It consists of the amount you actually invest plus interest
credited to your account and any additional investment you make
less withdrawals, penalties and any interest paid to you in cash.
For example: Assume your initial investment (face amount) of
$10,000 has earned a return of 7.25%. Interest is credited to your
account at the end of the term. You have not taken any interest as
cash, or made any withdrawals. You have invested an additional
$2,500 prior to the beginning of the next term. Your principal for
the next term will equal:
$10,000.00 Face Amount (initial investment)
plus 725.00 Interest credited to your account at the
end of the term
plus 5.00 Interim interest (See "Interim interest")
minus ($0.00) Interest paid to you in cash
plus 2,500.00 Additional investment to your certificate
minus ($0.00) Withdrawals and applicable penalties
$13,230.00 Principal at the beginning of the next
term.
Certificate term
Your first certificate term is a 12-month period that begins on the
Wednesday after your application is accepted and ends the Tuesday
before the one-year anniversary of its acceptance. For example, if
your application is accepted on a Wednesday, your first term would
begin the next Wednesday. Your certificate will earn interest at
the interim interest rate then in effect until the term begins. It
will not earn any participation interest until the term begins. If
you choose to continue to receive participation interest,
subsequent terms are 12-month periods that begin on the Wednesday
following the 14-day grace period at the end of the prior 12-month
term. You may begin your next term on any Wednesday during the <PAGE>
PAGE 161
14-day period by providing prior written instructions to IDSC. If
you choose to receive fixed interest, subsequent terms will be up
to 12 months as described in "Fixed interest" under "Interest"
below.
Value at maturity
Your certificate matures after 14 terms, and you will receive a
check for its value. At maturity, the value of your certificate
will be the total of your actual investments, plus credited
interest not paid to you in cash, less any withdrawals and
withdrawal penalties. Certain other fees may apply.
Receiving cash before end of the term
If you need money before your certificate term ends, you may
withdraw part or all of its value at any time, less any penalties
that apply. Procedures for withdrawing money, as well as
conditions under which penalties apply, are described in "Full and
partial withdrawals" under "How to invest and withdraw funds."
Interest
You may select from two types of participation interest for your
first term. The two types are 1) full participation, or 2) partial
participation together with minimum interest. Both of these
options have an upper limit which is the maximum annual return
explained below. After your first term, you may choose not to
participate in any market movement and receive a fixed rate of
interest.
Full participation interest: With this option you participate 100%
in any percentage increase in the S&P 500 Index up to the maximum
return. You earn interest only if the value of the S&P 500 Index
is higher on the last day of your term than it was on the first day
of your term. Thus, your return is linked to stock market
performance. The S&P 500 Index is frequently used to measure the
relative performance of the stock market. For a more detailed
discussion of the Index, see "About the S&P 500 Index."
Partial participation and minimum interest: This option allows you
to participate in a certain part (market participation rate) of any
increase in the S&P 500 Index together with a rate of interest
guaranteed by IDSC in advance for each term (minimum interest).
Your return is composed of two parts:
1. A percentage of any increase in the S&P 500 Index, and
2. A rate of interest guaranteed by IDSC in advance for each
term.
Together, they cannot exceed the maximum return.
If you chose the partial participation option for your first term,
the minimum interest paid on your certificate will be between 2.75%
and 3.75%.
The market participation rate and the minimum interest rate on the
date of this prospectus are listed on the inside cover under
"Initial interest and participation rates." <PAGE>
PAGE 162
Fixed interest: After your first term, this option allows you to
stop participating in the market entirely for one or more terms.
You may choose to receive a fixed rate of interest for any term
after the first term. During the term when you are receiving fixed
interest, you can change from your fixed interest selection to
again participate in the market. If you make the change from fixed
interest to participation interest, your next term would begin on
the Wednesday following our receipt of notice of your new
selection. In this way, you may have a term (during which you
would earn fixed interest) that is less than 12 months. You may
not change from participation interest to fixed interest during a
term.
Maximum annual return: This is the cap, or upper limit, of your
return. Your total return including both participation and minimum
interest for a term for which you have chosen participation
interest will be limited to this maximum return percentage.
Determining the S&P 500 index value: The stock market closes at 3
p.m. Central time and the S&P 500 Index value is available at
approximately 4:30 p.m. This is the value we currently use to
determine participation interest. Occasionally, Standard & Poor's
Corporation (S&P) makes minor adjustments to the closing value
after 4:30 p.m. and the value we use may not be exactly the one
that is published the next business day. In the future, we may use
a later time cut-off if it becomes feasible to do so. If the stock
market is not open or the S&P 500 Index is unavailable as of the
last day of your term, the preceding business day for which a value
is available will be used instead. Each Tuesday's closing value of
the S&P 500 Index is used for establishing the term start and the
term end values each week.
Interim interest: When we accept your application, we pay interim
interest to your account for the time before your first term
begins. We also pay interim interest for the 14-day period between
terms unless you write or call to ask us to begin your next term
earlier. You may withdraw this interest in cash at any time before
it becomes part of your certificate's principal without a
withdrawal penalty. If it is not withdrawn, the interest will
become part of your certificate's principal at the start of the
next succeeding term. For example, the interest you earn between
the end of the first and the beginning of the second term will
become part of the principal at the start of your third term.
Interim interest rates for the time before your first term begins
will be within a range 0 to 100 basis points (0.00% to 1.00%) above
the average interest rate published for 12-month certificates of
deposit in the BANK RATE MONITOR Top 25 Market AverageTM (the BRM
Average), North Palm Beach, FL 33408. If the BRM Average is no
longer publicly available or feasible to use, IDSC may use another,
similar index as a guide for setting rates.
The BANK RATE MONITOR is a weekly magazine published in North Palm
Beach, FL 33408 by Advertising News Service Inc., an independent
national news organization that collects and disseminates
information about bank products and interest rates. Advertising
News Service has no connection with IDSC, American Express <PAGE>
PAGE 163
Financial Corporation (AEFC) or any of their affiliates.
The BRM Average is an index of rates and annual effective yields
offered on various length certificates of deposit by large banks
and thrifts in 25 metropolitan areas. The frequency of compounding
varies among the banks and thrifts. Certificates of deposit in the
BRM Average are government insured fixed-rate time deposits.
The BANK RATE MONITOR may be available in your local library. To
obtain information or current BRM Average rates, call American
Express Financial Services Direct at the telephone numbers listed
on the back cover.
Earning interest: Participation interest is calculated, credited
and compounded at the end of your certificate term. Minimum
interest accrues daily and is credited and compounded at the end of
your certificate term. Fixed interest accrues and is credited
daily and compounds at the end of your term. Both minimum and
fixed interest are calculated on a 30-day month and 360-day year
basis. Interim interest accrues and is credited daily and
compounds at the end of your term immediately following the period
in which interim interest is credited.
Rates for future periods: After the initial term, the maximum
return, market participation percentage or minimum interest rate on
your certificate may be greater or less than those shown on the
front of this prospectus. In setting future interest rates, a
primary consideration will be the prevailing investment climate.
Rates are reviewed weekly, and we have complete discretion as to
what interest rate will be declared.
To find out what your certificate's new maximum return, market
participation percentage and minimum interest rate will be for your
next term, please consult American Express Financial Services
Direct at the telephone numbers listed on the back cover.
Promotions and pricing flexibility
From time to time, IDSC may sponsor or participate in promotions
involving one or more of the certificates and their respective
terms. For example, we may offer different rates to new clients,
to existing clients, or to individuals who purchase or use products
or services offered by American Express Service Corporation (AESC)
or its subsidiaries. These promotions will generally be for a
specified period of time.
We also may offer different rates based on your amount invested,
geographic location and whether the certificate is purchased for an
IRA or a qualified retirement account.
<PAGE>
PAGE 164
Historical Data on the S&P 500 Index
The following chart illustrates the month-end closing values of the
index from Dec. 31, 1983 through Feb. 28, 1996. The values of the
S&P 500 Index are reprinted with the permission of S&P.
S&P 500 Index values - December 1983 to February 1996
400
300 Chart shows closing values of the S&P from above 100 in
1994 to end near 500 in Feb. 1996
200
100
84 85 86 87 88 89 90 91 92 93 94 95
S&P 500 Index average annual return
Beginning date Period held Average annual
Dec. 31, in years return
___________________________________________________________________
1985 10 %
1990 5
1994 1
<PAGE>
PAGE 165
The next chart illustrates, on a moving 12-month basis, the price
return of the S&P 500 Index measured for every 12-month period
beginning with the period ended Dec. 31, 1984. The price return is
the percentage return for each period using month-end closing
prices of the S&P 500 Index. Dividends and other distributions on
the securities comprising the S&P 500 Index are not included in
calculating the price return.
S&P Index - December 1984 to February 1996
40%
Chart shows 12-month Moving Price Return of the S&P from
a high of 40% to a low of -20%
20%
0%
- -20%
85 86 87 88 89 90 91 92 93 94 95 96
Using the same data on price returns described above, the next
graph expands on the information in the preceding chart by
illustrating the distribution of all of the 12-month price returns
of the S&P 500 Index beginning with the 12-month period ending Dec.
31, 1984. The graph also shows the number of times these price
returns fell within certain ranges.
S&P 500 Index - December 1984 to February 1996
20
Chart shows the distribution of all of the 12-month price
returns of the S&P 500 from 1/1/84 through 2/28/96 with a
high of just over 20 and a low between 0 and 5
15
10
5
- -15 -10 -5 0 5 10 15 20 25 30
<PAGE>
PAGE 166
The last chart illustrates, on a moving weekly basis, the actual
12-month return of the IDS Stock Market Certificate at full and
partial participation compared to the price return of the NYSE
Composite IndexR through October 1992 and the S&P 500 Index after
October 1992. For non-guaranteed funds received before Nov. 3,
1992, and guaranteed funds received before Nov. 4, 1992, IDS Stock
Market Certificate participation interest was based on the NYSE
Composite IndexR rather than the S&P 500 Index.
<TABLE><CAPTION>
Actual 12-Month Return 1/22/91 to 2/8/96
<S> <C>
30%
25%
20% Chart shows actual returns of the certificate at full and
25% participation with the full participation generally
tracking the market indexes over the period and 25% level
of participation tracking at the 25% level of return.
15%
10% --- Market Index
*** Stock Market Full Participation
... Stock Market 25% Participation
5%
0%
1/91 4/91 7/91 10/91 1/92 4/92 7/92 10/92 1/93 4/93 7/93 10/93 2/94 4/94 7/94 10/94 2/95
</TABLE>
The NYSE Composite IndexR is a registered service mark of the New
York Stock Exchange, Inc. (NYSE) and is a composite covering price
movements of all common stocks listed on the NYSE. Because the IDS
Stock Market Certificate was first available on Jan. 24, 1990, the
performance reflects the returns on the one-year anniversary date,
falling on a Wednesday, of each of the weeks shown.
The recent historical experience of an index should not be taken as
an indication of future performance of the stock market or the
certificate. No assurance can be given that an index will not
decline or that certificate holders will receive interest on their
accounts beyond any minimum interest or fixed interest selected.
<PAGE>
PAGE 167
Calculation of return
The increase or decrease in the S&P 500 Index, as well as the
actual return paid to you, is calculated as follows:
Rate of return on S&P 500 Index
Term ending value of S&P 500 Index minus
Term beginning value of S&P 500 Index divided by
Term beginning value of S&P 500 Index equals
Rate of return on S&P 500 Index
The actual return paid to you will depend on your interest
participation selection.
For example, assume:
Term ending value of S&P 500 Index 458
Term beginning value of S&P 500 Index 422
Maximum return 10%
Minimum return 3.25%
Partial participation rate 25%
458 Term ending value of S&P 500 Index
minus 422 Term beginning value of S&P 500 Index
equals 36 Difference between beginning and ending values
36 Difference between beginning and ending values
divided by 422 Term beginning value of S&P 500 Index
equals 8.53% Percent increase - full participation return
8.53% Percent increase or decrease
times 25.00% Partial participation rate
equals 2.13%
plus 3.25% 3.25% minimum interest rate
equals 5.33% Partial participation return
In both cases in the example, the return would be less than the 10%
maximum.
Maximum Return and Partial Participation Minimum Rate History - The
following table illustrates the maximum annual returns and partial
participation minimum rates that have been in effect since the
Stock Market Certificate was introduced.
Partial
Maximum participation
Start of term annual return minimum rate
Jan. 24, 1990 18.00% 5.00%
Feb. 5, 1992 18.00 4.00
May 13, 1992 15.00 4.00
Sept. 9, 1992 12.00 3.00
Nov. 11, 1992 10.00 2.50
Nov. 2, 1994 10.00 2.75
April 26, 1995 12.00 3.50
Jan. 17, 1996 10.00 3.25
<PAGE>
PAGE 168
Examples
To help you understand the way this certificate works, here are
some hypothetical examples. The following are three different
examples of market scenarios and how they affect the certificate's
return. Assume for all examples that you purchased the certificate
with a $10,000 original investment. Also assume that the partial
participation rate is 25%, the minimum interest rate for partial
participation is 3.25%, and the maximum total return for full and
partial participation is 10%.
<TABLE><CAPTION>
- ------------------------------------------------------------------------------------------
1. If the Market and the S&P 500 Index value rise
Week 1/Wed Week 52/Tues
S&P 500 S&P 500
Index 425 8% Increase in the S&P 500 Index Index 459
<S> <C>
Full participation interest Partial participation interest and Minimum interest
$10,000 Original investment $10,000 Original investment
+ 800 (8% x $10,000) + 325 3.25% (Minimum interest rate) x $10,000
Participation interest + 200 25% x 8% x $10,000 participation interest
$10,800 Ending balance $10,525 Ending balance
(8% total return) (5.25% total return)
- ------------------------------------------------------------------------------------------
2. If the Market and the S&P 500 Index value fall
Week 1/Wed Week 52/Tues
S&P 500 S&P 500
Index 425 4% Decrease in the S&P 500 Index Index 408
Full participation interest Partial participation interest and Minimum interest
$10,000 Original investment $10,000 Original investment
+ 0 Participation interest + 325 3.25% (Minimum interest rate) x $10,000
$10,000 Ending balance + 0 Participation interest
(0% Total return) $10,325 Ending balance
(3.25% Total return)
- ----------------------------------------------------------------------------------------
3. If the Market and the S&P 500 Index value rise above maximum return
Week 1/Wed Week 52/Tues
S&P 500 S&P 500
Index 425 16% Increase in the S&P 500 Index Index 493
Full participation interest Partial participation interest and Minimum interest
$10,000 Original investment $10,000 Original investment
+ 1,000 (10% x $10,000) + 325 3.25% (Minimum interest rate) x $10,000
Maximum interest + 400 (25% x 16% x $10,000) Participation interest
$11,000 Ending balance $10,725 Ending balance
(10% Total return) (7.25% Total return)
</TABLE>
About the S&P 500 Index
The description in this prospectus of the S&P 500 Index including
its make-up, method of calculation and changes in its components
are derived from publicly available information regarding the S&P
500 Index. IDS Certificate Company (IDSC) does not assume any
responsibility for the accuracy or completeness of such
information.
The S&P 500 Index is composed of 500 common stocks, most of which
are listed on the New York Stock Exchange. The S&P 500 Index is
published by S&P and is intended to provide an indication of the
pattern of common stock movement. Standard & Poor's Corporation
(S&P) chooses the 500 stocks to be included in the S&P 500 Index
with the aim of achieving a distribution by broad industry
groupings that approximates the distribution of these groupings in
the common stock population of the New York Stock Exchange.
Changes in the S&P 500 Index are reported daily in the financial
pages of many major newspapers.
<PAGE>
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"Standard & Poor'sR," "S&P," "S&P 500," "Standard & Poor's 500,"
and "500" are trademarks of McGraw-Hill, Inc. and have been
licensed for use by IDSC. The certificate is not sponsored,
endorsed, sold or promoted by S&P. S&P makes no representation or
warranty, express or implied, to the owners of the certificate or
any member of the public regarding the advisability of investing in
securities generally or in the certificate particularly or the
ability of the S&P 500 Index to track general stock market
performance. S&P's only relationship to IDSC is the licensing of
certain trademarks and trade names of S&P and of the S&P 500 Index
which is determined, composed and calculated by S&P without regard
to IDSC or the certificate. S&P has no obligation to take the
needs of IDSC or the owners of the certificate into consideration
in determining, composing or calculating the S&P 500 Index. S&P is
not responsible for and has not participated in the determination
of the timing of, prices at, or quantities of the certificate to be
issued or in the determination or calculation of the equation by
which the certificate is to be converted into cash. S&P has no
obligation or liability in connection with the administration,
marketing or trading of the certificate.
S&P does not guarantee the accuracy and/or the completeness of the
S&P 500 Index or any data included therein and S&P shall have no
liability for any errors, omissions, or interruptions therein. S&P
makes no warranty, express or implied, as to the results to be
obtained by IDSC, owners of the certificate, or any person or
entity from the use of the S&P 500 Index or any data included
therein. S&P makes no express or implied warranties, and expressly
disclaims all warranties of merchantability or fitness for a
particular purpose or use with respect to the S&P 500 Index or any
data included therein. Without limiting any of the foregoing, in
no event shall S&P have any liability for any special, punitive,
indirect, or consequential damages (including lost profits), even
if notified of the possibility of such damages.
If for any reason the S&P 500 Index were to become unavailable or
not reasonably feasible to use, we would use a comparable stock
market index for determining participation interest. If this were
to occur, you would be sent a notice indicating the comparable
index that will be used and be given the option to withdraw your
certificate balance, if desired, and receive your principal,
without being assessed a withdrawal charge.
Opportunities at the end of a term
Grace period: When your certificate term ends, you have 14 days
before a new term automatically begins. During this 14-day grace
period you can:
o change your participation selection,
o add money to your certificate,
o change your term start date,
<PAGE>
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o withdraw part or all of your money without a withdrawal
penalty or loss of interest, or
o receive your interest in cash.
Fixed interest only: The grace period does not apply if you made
the change from fixed interest back to participation interest
during a term as discussed in "Fixed interest" under "Interest"
above. Instead, your new 12-month term will begin on the Wednesday
following our receipt of your notice of your new interest
selection.
New term: If you do not make changes, your certificate will
continue with your current selections when the new term begins 14
days later. You will earn interim interest during this 14-day
grace period. If you don't want to wait 14 days before starting
your next market participation term, you must call or give us
written instructions before your current term ends. Or, you may
phone in your instructions and follow up the call with written
verification. You can tell us to start your next term on any
Wednesday during the grace period immediately following our receipt
of your notice. Your notice may also tell us to change your
interest selection, add to your certificate or withdraw part of
your money. Term end notification cannot be sent in advance
because indexing information and interest (if any) are included.
Any additional payments received during the current term will be
applied at the end of the current term. By starting your new term
early and waiving the 14-day grace period, you are choosing to
start your next term without knowing the ending value of your
current term.
How to invest and withdraw funds
Buying your certificate
Your financial consultant will help you fill out and submit an
application to open an account with us and purchase a certificate.
We will process the application at our corporate offices in
Minneapolis. When your application is accepted and we have
received your initial investment, we will send you a confirmation
showing the acceptance date, the date your term begins and the
interest selection you have made detailing your market
participation percentage and, if applicable, the guaranteed minimum
interest rate for your first term. After your term begins, we will
send you notice of the value of the S&P 500 Index on the day your
term began. The rates in effect on the date we accept your
application are the rates that apply to your certificate. (See
"Purchase policies" below).
IMPORTANT: When opening an account, you must provide IDSC with
your correct Taxpayer Identification Number (Social Security Number
or Employer Identification Number or a Form W-8 or approved
substitute). See "Taxes on your earnings."
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Purchase policies:
o Investments must be received and accepted in the Minneapolis
headquarters on a business day before 3 p.m. Central time to be
included in your account that day. Otherwise your purchase will be
processed the next business day.
o If you purchase a certificate with a personal check or other non-
guaranteed funds, AEFC will wait one day for the process of
converting your check to federal funds (e.g., monies of member
banks within the Federal Reserve Bank) before your purchase will be
accepted and you begin earning interest.
o IDSC has the authority to determine whether to accept an
application and sell a certificate.
A number of special policies apply to purchases, withdrawals and
exchanges within IRAs. See "IRAs: special policies."
Two ways to make additional investments at term end
1
By mail
Send your check along with your name and account number to:
Regular mail: Express mail:
American Express Financial American Express Financial
Services Direct Corporation
P.O. Box 59196 Attn: American Express
Minneapolis, MN 55459-0196 Financial Services
Direct I12/716
733 Marquette Avenue
Minneapolis, MN
55402-2039
2
By wire
If you have an established account, you may wire money to:
Norwest Bank Minneapolis
Routing No. 091000019
Minneapolis, MN
Attn: Domestic Wire Dept.
Give these instructions: Credit IDS Account #00-30-015 for
personal account # (your account number) for (your name).
If this information is not included, the order may be rejected and
all money received less any costs IDSC incurs will be returned
promptly.
o Minimum amount you may wire: $1,000
o Wire orders can be accepted only on days when your bank, AEFC,
IDSC, Norwest Bank Minneapolis and American Express Financial
Services Direct are open for business.
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o Wire purchases are completed when wired payment is received
and we accept the purchase.
o Wire investments must be received and accepted in the
Minneapolis headquarters on a business day before 3 p.m.
Central time to be credited that day. Otherwise your purchase
will be processed the next business day.
o IDSC, AEFC and AESC are not responsible for any delays that
occur in wiring funds, including delays in processing by the
bank.
o You must pay any fee the bank charges for wiring.
Full and partial withdrawals
You may withdraw your certificate for its full value or make a
partial withdrawal of $100 or more at any time. However:
o If your withdrawal request is received in the Minneapolis
headquarters on a business day before 3 p.m. Central time, it
will be processed that day and payment will be sent the next
business day. Otherwise, your request will be processed one
business day later.
o Full and partial withdrawals of principal during a term are
subject to penalties, described below.
o You may not make a partial withdrawal if it would reduce your
certificate balance to less than $1,000. If you request such
a withdrawal, we will contact you for revised instructions.
Penalties for withdrawal during a term: If you withdraw money
during a term, you will pay a penalty of 2% of the principal
withdrawn. (The 2% penalty is waived upon death of the certificate
owner or if it is for an IRA and you have reached age 70 1/2.)
When you request a full or partial withdrawal during a term, we pay
you from the principal of your certificate.
Loss of interest: If you make a withdrawal at any time other than
at the end of the term, you will lose interest accrued on the
withdrawal amount since minimum and participation interest is
credited only at the end of a term. However, accrued fixed and
interim interest will be paid to the date of the withdrawal.
Following are examples describing a $2,000 withdrawal during a term
for participation and fixed interest:
Participation interest
Account balance $10,000.00
Interest (interest is credited at the end of 0.00
the term)
Withdrawal of principal ( 2,000.00)
2% withdrawal penalty (40.00)
Balance after withdrawal. $ 7,960.00 <PAGE>
PAGE 173
You will forfeit any accrued interest on the
withdrawal amount.
Fixed interest
Account balance $10,000.00
Interest credited to date 100.00
Withdrawal of credited interest (100.00)
Withdrawal of principal (1,900.00)
2% withdrawal penalty (on $1,900 (38.00)
principal withdrawn)
Balance after withdrawal. $ 8,062.00
IRAs: In addition, you may be subject to IRS penalties for early
withdrawals if your certificate is in an IRA.
Other full and partial withdrawal policies:
o If you request a partial or full withdrawal of a certificate
recently purchased or added to by a check or money order that
is not guaranteed, we will wait for your check to clear.
Please expect a minimum of 10 days from the date of your
payment before IDSC mails a check to you. (A check may be
mailed earlier if your bank provides evidence that your check
has cleared.)
o If your certificate is pledged as collateral, any withdrawal
will be delayed until we get approval from the secured party.
o Any payments to you may be delayed under applicable rules,
regulations or orders of the SEC.
Two ways to request a withdrawal
1
By phone
o Call the American Express Financial Services Direct service
team at the numbers listed on the back cover.
o Maximum phone request: $50,000
o A telephone withdrawal request will not be allowed within 30
days of a phoned-in address change.
o We will honor any telephone request believed to be authentic
and will use reasonable procedures to confirm that they are.
This includes asking identifying questions and tape recording
telephone calls. So long as reasonable procedures are
followed, neither IDSC nor AEFC or its subsidiaries will be
liable for any loss resulting from fraudulent requests.
You may request that telephone withdrawals not be authorized from
your account by writing American Express Financial Services Direct.<PAGE>
PAGE 174
2
By mail
Send your name, account number and request for a withdrawal or
transfer to:
Regular mail:
American Express Financial Services Direct
P.O. Box 59196
Minneapolis, MN 55459-0196
Express mail:
American Express Financial Corporation
Attn: American Express Financial Services Direct
I12/716
733 Marquette Avenue
Minneapolis, MN 55402-2039
Written requests are required for:
o Transactions over $50,000
o Custodial accounts where the minor has reached the age at
which custodianship should terminate.
Three ways to receive payment when you withdraw funds
1
By regular or express mail
o Mailed to address on record; please allow seven days for
mailing
o Payable to name(s) you requested
o For express mail, you will pay charges that vary depending on
the courier you select. For a partial withdrawal leaving a
remaining balance of more than $1,000, these charges will be
deducted from the remaining balance. If the remaining balance
is less than $1,000, or if it is a full withdrawal, charges
are deducted from proceeds of the withdrawal.
2
By wire
o Minimum wire withdrawal: $1,000
o Request that money be wired to your bank
o Bank account must be in same ownership as IDSC account
o Pre-authorization required. Complete the bank wire
authorization section in the application. All registered
owners must sign.
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o A service fee, if any, may be deducted from your balance (for
partial withdrawals) or from the proceeds of a full
withdrawal.
3
By electronic transfer
o Available only for preauthorized scheduled partial withdrawals
and other full or partial withdrawals.
o No charge
o Deposited electronically in your bank account
o Allow two to five business days from request to deposit
IRAs: special policies
o If the certificate is purchased for an IRA, the terms and
conditions of the certificate apply to the IRA as the owner of
this certificate. However, the terms of the IRA, as
interpreted by the trustee, will determine how a participant's
individual IRA is administered. These terms may differ from
the terms of the certificate.
o The annual custodial fee for an IRA may be deducted from your
certificate account. It may reduce the amount payable at
maturity or the amount received upon an early withdrawal.
o IRA withdrawals may be subject to withdrawal penalties or loss
of interest even if they are not subject to federal tax
penalties.
o We will waive withdrawal penalties on withdrawals for IRA
accounts of clients who have reached age 70 1/2.
o If you withdraw all funds from your last account in an IRA at
American Express Trust Company, a $25 termination fee will
apply.
o The IRA termination fee will be waived if withdrawal occurs
upon the account owner's death.
Transfer of ownership
While the certificate is not negotiable, IDSC will transfer
ownership upon written notification to American Express Financial
Services Direct. However, if you have purchased your certificate
for an IRA, you may be unable to transfer or assign the certificate
without losing the account's favorable status. Please consult your
tax advisor.
For more information
For information on purchases, withdrawals, exchanges, transfers of
ownership, proper instructions and other service questions <PAGE>
PAGE 176
regarding your certificate, please consult the American Express
Financial Services Direct service team at the telephone numbers
listed on the back cover.
Taxes on your earnings
Participation and minimum interest on your certificate is taxable
when credited to your account. Fixed and interim interest are
fully taxable as earned. Each calendar year we provide certificate
owners and the IRS with reports of all earnings over $10 (Form
1099). Withdrawals are reported to the certificate owner and the
IRS on Form 1099-B, Proceeds from Broker Transactions.
Revised proposed regulations: The IRS has issued revised proposed
regulations governing the tax treatment of debt instruments which
provide for variable rates of interest, including interest based on
the price of property that is actively traded or on an index of the
prices of such property. Under these revised proposed regulations,
the IDS Stock Market Certificate is likely to constitute a debt
instrument that would be treated as a variable rate debt instrument
(VRDI) rather than a contingent debt instrument (CDI). If the
Stock Market Certificate constitutes a VRDI, then the income earned
on the certificate will be treated as original issue discount and
reported when credited to the holder's account. If the certificate
is not treated as a VRDI, but rather is treated as a CDI, then the
owner may have taxable income to report, even though the account
owner has not received any cash distributions. Furthermore, the
timing and character of the income may be different from that of a
VRDI. IDSC cannot guarantee whether the revised proposed
regulations will be adopted as final in this present form or will
again be modified. As always, you should consult your tax adviser
for information regarding the tax implications of your certificate.
Retirement accounts
If you are using the certificate as an investment for an IRA,
income tax rules for your IRA apply. Generally, you will pay no
income taxes on your investment's earnings--and, in many cases, on
part or all of the investment itself--until you begin to make
withdrawals.
IDSC will withhold federal income taxes of 10% on IRA withdrawals
unless you tell us not to.
Withdrawals from retirement accounts are generally subject to a
penalty tax of 10% by the IRS if you make them before age 59 1/2,
unless you are disabled or if they are made by your beneficiary in
the event of your death. (Other exceptions may also apply.)
Consult your tax advisor to see how these rules apply to you before
you request a distribution from your IRA.
Gifts to minors
The certificate may be given to a minor under either the Uniform
Gifts or Uniform Transfers to Minors Act (UGMA/UTMA), whichever <PAGE>
PAGE 177
applies in your state. UGMAs/UTMAs are irrevocable. Generally,
under federal tax laws, income over $1,200 on property owned by
children under age 14 will be taxed at the parents' marginal tax
rate, while income on property owned by children 14 or older will
be taxed at the child's rate.
Your Taxpayer Identification Number (TIN) and backup withholding:
As with any financial account you open, you must list your current
and correct Taxpayer Identification Number (TIN)--either your
Social Security or Employer Identification Number. The TIN must be
certified under penalties of perjury on your application when you
open an account with American Express Financial Services Direct.
If you don't provide the TIN to American Express Financial Services
Direct, or the TIN you report is incorrect, you could be subject to
backup withholding of 31% of your interest earnings. You could
also be subject to further penalties, such as:
o $50 penalty for each failure to supply your correct TIN
o a civil penalty of $500 if you make a false statement that
results in no backup withholding
o criminal penalties for falsifying information.
You could also be subject to backup withholding because you failed
to report interest on your tax return as required.
To help you determine the correct TIN to use on various types of
accounts, please use this chart:
How to determine the correct TIN
Use the Social Security or
For this type of account: Employer Identification Number of:
Individual or joint The individual or first person
listed on the account
Custodian account of a minor The minor
(Uniform Gifts/Transfers to
Minors Act)
A living trust The grantor-trustee (the person
who puts the money into the trust)
An irrevocable trust The legal entity (not the personal
or estate representative or trustee, unless
no legal entity is designated in
the account title)
Sole proprietorship or The owner or partnership
partnership
Corporate The corporation
Association, club or The organization
tax-exempt organization
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For details on TIN requirements, ask your American Express
Financial Services Direct Team for Federal Form W-9, Request for
Taxpayer Identification Number and Certification.
Foreign investors
If you are not a citizen or resident of the United States, you must
supply American Express Financial Services Direct with Form W-8,
Certificate of Foreign Status when you purchase your certificate,
and you must resupply it every three years. You must also supply
both a current mailing address and an address of foreign residency,
if different. American Express Financial Services Direct will not
accept purchases of certificates by nonresident aliens without an
appropriately certified Form W-8 (or approved substitute). Also,
if you do not supply Form W-8 you will be subject to backup
withholding on interest payments and withdrawals.
It is most likely that interest on the certificate is "portfolio
interest" as defined in U.S. Internal Revenue Code Section 871(h)
if earned by a nonresident alien. However, if the certificate is
treated as a CDI, part of the earned income may be treated as
capital gain instead of portfolio interest. Even though your
interest income or capital gain is not taxed by the U.S.
government, it will be reported at year end to you and to the U.S.
government on a Form 1042S, Foreign Person's U.S. Source Income
Subject to Withholding. The United States participates in various
tax treaties with foreign countries, which provide for sharing of
tax information.
Estate tax: If you are a nonresident alien and you die while
owning a certificate, American Express Financial Services Direct
will need a statement from persons American Express Financial
Services Direct believes are knowledgeable about your estate. The
statement must be in a form satisfactory to American Express
Financial Services Direct and must tell us that, on your date of
death, your estate did not include any property in the United
States for U.S. estate tax purposes. If we do not receive the
statement, we generally will not take action regarding your
certificate until we receive a transfer certificate from the IRS.
In general, a transfer certificate requires the opening of an
estate in the United States and provides assurance that the IRS
will not claim your IDS certificate to satisfy estate taxes.
IMPORTANT: This information is a brief and selective summary of
certain federal tax rules that apply to this certificate. Tax
matters are highly individual and complex, and you should consult a
qualified tax adviser about your personal situation.
How your money is used and protected
Invested and guaranteed by IDSC
The IDS Stock Market Certificate is issued and guaranteed by IDSC,
a wholly owned subsidiary of AEFC. We are by far the largest
issuer of face amount certificates in the United States, with total
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PAGE 179
assets of more than $___ billion and a net worth in excess of $___
million on Dec. 31, 1995.
We back our certificates by investing the money received and
keeping the invested assets on deposit. Our investments generate
interest and dividends, out of which we pay:
o interest to certificate owners
o various expenses, including taxes, fees to AEFC for advisory
and other services and distribution fees to AESC, and American
Express Financial Advisors Inc.
For a review of significant events relating to our business, see
"Management's discussion and analysis of financial condition and
results of operations." Our certificates are not rated by a
national rating agency.
Most banks and thrifts offer investments known as certificates of
deposit (CDs) that are similar to our certificates in many ways.
Early withdrawal of bank CDs often results in penalties. Banks and
thrifts generally have federal deposit insurance for their deposits
and lend much of the money deposited to individuals, businesses and
other enterprises. Other financial institutions and some insurance
companies may offer investments with comparable combinations of
safety and return on investment.
Regulated by government
Because the IDS Stock Market Certificate is a security, its offer
and sale are subject to regulation under federal and state
securities laws. (It is a face-amount certificate--not a bank
product, an equity investment, a form of life insurance or an
investment trust.)
The federal Investment Company Act of 1940 requires us to keep
investments on deposit in a segregated custodial account to protect
all of our outstanding certificates. These investments back the
entire value of your certificate account. Their amortized cost
must exceed the required carrying value of the outstanding
certificates by at least $250,000. As of Dec. 31, 1995, the
amortized cost of these investments exceeded the required carrying
value of our outstanding certificates by more than $___ million.
Backed by our investments
Our investments are varied and of high quality. This was the
composition of our portfolio as of Dec. 31, 1995:
Type of investment Net amount invested
Corporate and other bonds 31%
Government agency bonds 27
Preferred stocks 23
Mortgages 9
Municipal bonds 5
Cash and cash equivalents 5<PAGE>
PAGE 180
More than 95% of our securities portfolio (bonds and preferred
stocks) is rated investment grade. For additional information
regarding securities ratings, please refer to Note 3B in the
financial statements.
Most of our investments are on deposit with American Express Trust
Company (formerly IDS Trust Company), Minneapolis, although we also
maintain separate deposits as required by certain states. American
Express Trust Company is a wholly owned subsidiary of AEFC. Copies
of our Dec. 31, 1995 schedule of Investments in Securities of
Unaffiliated Issuers are available upon request. For comments
regarding the valuation, carrying values and unrealized
appreciation (depreciation) of investment securities, see Notes 1,
2 and 3 to the financial statements.
Investment policies
In deciding how to diversify the portfolio--among what types of
investments in what amounts--the officers and directors of IDSC use
their best judgment, subject to applicable law. The following
policies currently govern our investment decisions:
Purchasing securities on margin: We will not purchase any
securities on margin or participate on a joint basis or a joint-
and-several basis in any trading account in securities.
Commodities: We have not and do not intend to purchase or sell
commodities or commodity contracts.
Underwriting: We do not intend to engage in the public
distribution of securities issued by others. However, if we
purchase unregistered securities and later resell them, we may be
considered an underwriter under federal securities laws.
Borrowing money: From time to time we have established a line of
credit if management believed borrowing was necessary or desirable.
While a line of credit does not currently exist, it may be
established again in the future. We may pledge some of our assets
as security. We may occasionally use repurchase agreements as a
way to borrow money. Under these agreements, we sell debt
securities to our lender, and repurchase them at the sales price
plus an agreed-upon interest rate within a specified period of
time.
Real estate: We may invest directly in real estate, though we have
not generally done so in the past. We do invest in mortgage loans.
Lending securities: We may lend some of our securities to broker-
dealers and receive cash equal to the market value of the
securities as collateral. We invest this cash in short-term
securities. If the market value of the securities goes up, the
borrower pays us additional cash. During the course of the loan,
the borrower makes cash payments to us equal to all interest,
dividends and other distributions paid on the loaned securities.
We will try to vote these securities if a major event affecting our
investment is under consideration.
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When-issued securities: Most of our investments are in debt
securities, some of which are purchased on a when-issued basis. It
may take as long as 45 days or more before these securities are
issued and delivered to us. We generally do not pay for these
securities or start earning on them until delivery. We have
established procedures to ensure that sufficient cash is available
to meet when-issued commitments.
Financial transactions: We buy or sell various types of options
contracts for hedging purposes or as a trading technique to
facilitate securities purchases or sales. We buy interest rate
caps for hedging purposes. These pay us a return if interest rates
rise above a specified level. IDSC may enter into financial
transactions, including futures and other derivatives, for the
purpose of managing the interest rate exposures associated with
IDSC's assets or liabilities. Derivatives are financial
instruments whose performance is derived, at least in part, from
the performance of an underlying asset, security or index. A small
change in the value of the underlying asset, security or index may
cause a sizable gain or loss in the fair value of the derivative.
Illiquid securities: A security is illiquid if it cannot be sold
in the normal course of business within seven days at approximately
its current market value. Some investments cannot be resold to the
U.S. public because of their terms or government regulations. All
securities, however, can be sold in private sales, and many may be
sold to other institutions and qualified buyers or on foreign
markets. IDSC's investment advisor will follow guidelines
established by the board and consider relevant factors such as the
nature of the security and the number of likely buyers when
determining whether a security is illiquid. No more than 15% of
IDSC's investment portfolio will be held in securities that are
illiquid. In valuing its investment portfolio to determine this
15% illiquid securities limit, IDSC will use statutory accounting.
This means that, for this purpose, the portfolio will be valued in
accordance with applicable investment statutes rather than
generally accepted accounting principles.
Restrictions: There are no restrictions on concentration of
investments in any particular industry or group of industries or on
rates of portfolio turnover.
How your money is managed
Relationship between IDSC and AEFC
IDSC was originally organized as Investors Syndicate of America,
Inc., a Minnesota corporation, on Oct. 15, 1940, and began business
as an issuer of face amount investment certificates on Jan. 1,
1941. The company became a Delaware corporation on Dec. 31, 1977,
and changed its name to IDS Certificate Company on April 2, 1984.
Before IDSC was created, AEFC, our parent company and organizer,
had issued similar certificates since 1894. On Jan. 1, 1995, AEFC
changed its name from IDS Financial Corporation. IDSC and AEFC
have never failed to meet their certificate payments.
<PAGE>
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During its many years in operation, AEFC has become a leading
manager of investments in mortgages and securities. As of Dec. 31,
1995, AEFC managed investments, including its own, of more than
$105 billion. [AEFC's wholly owned subsidiary, AESC, provides a
broad range of financial planning services for individuals and
businesses through its nationwide network of more than ___ offices
and more than _____ financial advisors. AESC's financial planning
services are comprehensive, beginning with a detailed written
analysis that's tailored to your needs. Your analysis may address
one or all of these six essential areas: financial position,
protection planning, investment planning, income tax planning,
retirement planning, and estate planning.]
AEFC itself is a wholly owned subsidiary of American Express
Company, a financial services company with executive offices at
American Express Tower, World Financial Center, New York, NY 10285.
American Express Company is a financial services company engaged
through subsidiaries in other businesses including:
o travel related services (including American ExpressR Card and
Travelers Cheque operations through American Express Travel
Related Services Company, Inc. and its subsidiaries), and
o international banking services (through American Express Bank
Ltd. and its subsidiaries).
About AESC
AESC is a wholly-owned subsidiary of American Express Travel
Related Services Inc., which in turn is a wholly-owned subsidiary
of American Express Company.
AESC is not a bank, and the securities offered by it, such as face
amount certificates issued by IDSC, are not backed or guaranteed by
any bank, nor are they insured by the FDIC.
Capital structure and certificates issued
IDSC has authorized, issued and has outstanding 150,000 shares of
common stock, par value of $10 per share. AEFC owns all of the
outstanding shares.
As of Dec. 31, 1995, IDSC had issued (in face amount)
$______________ of installment certificates and $______________ of
single payment certificates.
Investment management and services
Under an Investment Advisory and Services Agreement, AEFC acts as
our investment advisor and is responsible for:
o providing investment research,
o making specific investment recommendations
o executing purchase and sale orders according to our policy of
obtaining the best price and execution.
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All these activities are subject to direction and control by our
board of directors and officers. Our agreement with AEFC requires
annual renewal by our board, including a majority of directors who
are not interested persons of AEFC or IDSC as defined in the
federal Investment Company Act of 1940.
For its services, we pay AEFC a monthly fee, equal on an annual
basis to a percentage of the total book value of certain assets
(included assets):
Advisory and services fee computation:
Included assets Percentage of total book value
First $250 million 0.75%
Next 250 million 0.65
Next 250 million 0.55
Next 250 million 0.50
Any amount over $1 billion 0.45
Included assets are all assets of IDSC except mortgage loans, real
estate, and any other asset on which we pay an advisory or service
fee.
Advisory and services fees for the past three years were:
Percentage of
Year Total fees included assets
1995 $ %
1994 $13,565,432 0.51
1993 $15,036,091 0.50
Estimated advisory and services fees for 1996 are $__________.
Other expenses payable by IDSC: The Investment Advisory and
Services Agreement provides that we will pay:
o costs incurred by us in connection with real estate and
mortgages,
o taxes,
o depository and custodian fees,
o brokerage commissions,
o fees and expenses for services not covered by other agreements
and provided to us at our request, or by requirement, by
attorneys, auditors, examiners and professional consultants
who are not officers or employees of AEFC,
o fees and expenses of our directors who are not officers or
employees of AEFC,
o provision for certificate reserves (interest accrued on
certificate owner accounts), and
o expenses of customer settlements not attributable to sales
function.
<PAGE>
PAGE 184
Distribution
Under a Distribution Agreement with AESC, for certificates sold
through American Express Financial Services Direct, we pay AESC for
the distribution of this certificate as follows:
o 1.00% of the initial investment on the first day of the
certificate's term, and
o 1.00% of the certificate's reserve at the beginning of each
subsequent term.
Under a Distribution Agreement with American Express Financial
Advisors Inc. we pay for the distribution of this certificate as
follows:
o 1.25% of the initial investment on the first day of the
certificate's term, and
o 1.25% of the certificate's reserve at the beginning of each
subsequent term, for certificates sold through American
Express financial advisors or through American Express Bank
International (AEBI) or Coutts & Co (USA) International
(Coutts) representatives.
This fee is not assessed to your certificate account.
Total distribution fees paid to American Express Financial Advisors
Inc. for all series of certificates amounted to $__________ during
the year ended Dec. 31, 1995. We expect to pay American Express
Financial Advisors Inc. distribution fees amounting to $__________
during 1996 and AESC distribution fees amounting to $_________
during 1996.
See Note 1 to financial statements regarding deferral of
distribution fee expense.
AESC pays commissions to its financial advisors. American Express
Financial Advisors Inc. and AESC pay other selling expenses in
connection with services to us. Our board of directors, including
a majority of directors who are not interested persons of American
Express Financial Advisors Inc., AESC or IDSC, approved these
distribution agreements.
Selling Agent Agreements with AEBI and Coutts: In turn, under
Selling Agent Agreements with AEBI and Coutts, American Express
Financial Advisors Inc. compensates each for their services as
Selling Agents of this certificate as follows:
o AEBI is paid a fee equal to 1.0% per term of the principal
amount of each certificate for which AEBI is the selling
agent.
o Coutts is paid a fee equal to 0.80% per term of the principal
amount of each certificate for which Coutts is the selling
agent.
<PAGE>
PAGE 185
Coutts is compensated on additional investments made by its clients
who are former clients of AEBI. These clients must have
continuously owned a certificate since Nov. 10, 1994. Coutts is
also compensated on exchanges made by such clients to other
certificates only to the extent that a client has the right to make
additional investments or exchanges.
American Express Financial Advisors Inc. has entered into a
consulting agreement with AEBI under which AEBI provides consulting
services related to any selling agent agreements between American
Express Financial Advisors Inc. and other Edge Act corporations.
For these services, American Express Financial Advisors Inc. pays
AEBI a fee for this certificate equal to 0.20% per term of the
principal amount of each certificate for which another Edge Act
corporation is the selling agent.
Such payments will be made quarterly in arrears.
These fees are not assessed to your certificate account.
AEBI and Coutts are Edge Act corporations organized under the
provisions of Section 25(a) of the Federal Reserve Act. AEBI is a
wholly owned subsidiary of American Express Bank Ltd. (AEBL).
Coutts is an indirect wholly owned subsidiary of NatWest PLC. As
Edge Act corporations, AEBI and Coutts are subject to the
provisions of Section 25(a) of the Federal Reserve Act and
Regulation K of the Board of Governors of the Federal Reserve
System (the Federal Reserve). They are supervised and regulated by
the Federal Reserve.
Although AEBI and Coutts are banking entities, the Stock Market
Certificate is not a bank product, nor is it backed or guaranteed
by AEBI, by AEBL, by Coutts, by NatWest PLC or by any other bank,
nor is it guaranteed or insured by the FDIC or any other federal
agency. AEBI is registered where necessary as a securities broker-
dealer.
Employment of other American Express affiliates
AEFC may employ an affiliate of American Express as executing
broker for our portfolio transactions only if:
o we receive prices and executions at least as favorable as
those offered by qualified independent brokers performing
similar services;
o the affiliate charges us commissions consistent with those
charged to comparable unaffiliated customers for similar
transactions; and
o the affiliate's employment is consistent with the terms of the
current Investment Advisory and Services Agreement and federal
securities laws.
<PAGE>
PAGE 186
Directors and officers
IDSC's directors, chairman, president and controller are elected
annually for a term of one year. The other executive officers are
appointed by the president.
We paid a total of $______ during 1995 to directors not employed by
AEFC.
Board of directors
David R. Hubers*
Born in 1943.
Director since 1987.
President and chief executive officer of AEFC since 1993. Senior
vice president and chief financial officer of AEFC from 1984 to
1993.
Charles W. Johnson
Born in 1929.
Director since 1989.
Former vice president and group executive, Industrial Systems, with
Honeywell Inc. Retired 1989.
Edward Landes
Born in 1919.
Director since 1984.
Development consultant. Former sales manager - Supplies Division
and district manager - Data Processing Division of IBM Corporation.
Retired 1983.
John V. Luck Ph.D.
Born in 1926.
Director since 1987.
Former senior vice president - Science and Technology with General
Mills, Inc. Employed with General Mills Inc. since 1970. Retired
1987.
James A. Mitchell*
Born in 1941.
Director since 1994.
Chairman of the board of directors since 1994. Executive vice
president - marketing and products of AEFC since 1994. Senior vice
president - insurance operations of AEFC and president and chief
executive officer of IDS Life Insurance Company from 1986 to 1994.
Harrison Randolph
Born in 1916.
Director since 1968.
<PAGE>
PAGE 187
Gordon H. Ritz
Born in 1926.
Director since 1968.
President, Con Rad Broadcasting Corp. Director, Sunstar Foods and
Mid-America Publishing.
Stuart A. Sedlacek*
Born in 1957.
Director since 1994.
President since 1994. Vice president - assured assets of AEFC
since 1994. Vice president and portfolio manager from 1988 to
1994. Executive vice president - assured assets of IDS Life
Insurance Company since 1994.
*"Interested Person" of IDSC as that term is defined in Investment
Company Act of 1940.
Executive officers
Stuart A. Sedlacek
Born in 1957.
President since 1994.
Morris Goodwin Jr.
Born in 1951.
Vice president and treasurer since 1989.
Vice president and corporate treasurer of AEFC since 1989. Chief
financial officer and treasurer of American Express Trust Company
from 1988 to 1989.
Timothy S. Meehan
Born in 1957.
Secretary since 1995.
Secretary of AEFC and American Express Financial Advisors Inc.
since 1995. Senior counsel to AEFC since 1995. Counsel from 1990
to 1995.
Lorraine R. Hart
Born in 1951.
Vice president-investments since 1994.
Vice President - insurance investments of AEFC since 1989. Vice
president, investments of IDS Life Insurance Company since 1992.
Jay C. Hatlestad
Born in 1957.
Vice president and controller since 1994.
Director of finance - assured assets of AEFC since 1994. Manager
of investment accounting of IDS Life Insurance Company from 1986 to
1994.
<PAGE>
PAGE 188
Bruce A. Kohn
Born in 1951.
Vice president and general counsel since 1993.
Counsel to AEFC since 1992. Associate counsel from 1987 to 1992.
F. Dale Simmons
Born in 1937.
Vice president - Real Estate Loan Management since 1993.
Vice president of AEFC since 1992. Senior portfolio manager of
AEFC since 1989. Assistant vice president from 1987 to 1992.
The officers and directors as a group beneficially own less than 1%
of the common stock of American Express Company.
IDSC has provisions in its bylaws relating to the indemnification
of its officers and directors against liability, as permitted by
law. Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers or
persons controlling the registrant pursuant to the foregoing
provisions, the registrant has been informed that in the opinion of
the SEC such indemnification is against public policy as expressed
in the Act and is therefore unenforceable.
Auditors
A firm of independent auditors audits our financial statements at
the close of each fiscal year (Dec. 31). Copies of our annual
financial statements (audited) and semiannual financial statements
(unaudited) are available to any certificate owner upon request.
Ernst & Young LLP, Minneapolis, has audited the financial
statements for each of the years in the three-year period ended
Dec. 31, 1995. These statements are included in this prospectus.
Ernst & Young LLP is also the auditor for American Express Company,
the parent company of AEFC and IDSC.
<PAGE>
PAGE 189
(back cover)
Quick telephone reference
American Express Financial Services Direct Service Team
Withdrawals, transfers, inquiries
National: 800-AXP-SERV
Financial Consultant
800-AXP-8800
TTY Service
For the hearing impaired
800-710-5260
American Express Financial Advisors
IDS Stock Market Certificate
IDS Tower 10
Minneapolis, MN 55440-0010
<PAGE>
PAGE 190
PART II. INFORMATION NOT REQUIRED IN PROSPECTUS
Item
Number
Item 13. Other Expenses of Issuance and Distribution.
The expenses in connection with the issuance and
distribution of the securities being registered are to be
borne by the registrant.
Item 14. Indemnification of Directors and Officers.
The By-Laws of IDS Certificate Company provide that it
shall indemnify any person who was or is a party or is
threatened to be made a party, by reason of the fact that
he was or is a director, officer, employee or agent of
the company, or is or was serving at the direction of the
company, or any predecessor corporation as a director,
officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, to
any threatened, pending or completed action, suit or
proceeding, wherever brought, to the fullest extent
permitted by the laws of the state of Delaware, as now
existing or hereafter amended.
The By-Laws further provide that indemnification
questions applicable to a corporation which has been
merged into the company relating to causes of action
arising prior to the date of such merger shall be
governed exclusively by the applicable laws of the state
of incorporation and by the by-laws of such merged
corporation then in effect. See also Item 17.
Item 15. Recent Sales of Unregistered Securities.
(a) Securities Sold
Period of sale Title of securities Amount sold
1992 IDS Special Deposits $29,753,590.00
1993 IDS Special Deposits 8,367,601.13
1994 IDS Special Deposits 18,013,424.38
1995 IDS Special Deposits 56,855,953.00
(b) Underwriters and other purchasers
IDS Special Deposits are marketed by American Express Bank Ltd.
(AEB), an affiliate of IDS Certificate Company, to private banking
clients of AEB in the United Kingdom.
(c) Consideration
All IDS Special Deposits were sold for cash. The aggregate
offering price was the same as the amount sold in the table above.
Aggregate marketing fees to AEB were $147,146.65 in 1992,
$153,318.21 in 1993, $88,686.14 in 1994, and $172,633.41 in 1995.
<PAGE>
PAGE 191
(d) Exemption from registration claimed
IDS Special Deposits are marketed, pursuant to the exemption in
Regulation S under the Securities Act of 1933, by AEB in the United
Kingdom to persons who are not U.S. persons, as defined in
Regulation S.
Item 16. Exhibits and Financial Statement Schedules.
(a) The following exhibits to this Post-Effective Amendment
No. 16 to Registration Statement No. 2-95577 are
incorporated herein by reference or attached hereto:
1. (a) Copy of Distribution Agreement dated November
18, 1988, between Registrant and IDS Financial
Services Inc., filed electronically as Exhibit
1(a) to the Registration Statement for the
American Express International Investment
Certificate (now called, the IDS Investors
Certificate), is incorporated herein by
reference.
(c)(b)Selling Agent Agreement dated June 1, 1990,
between American Express Bank International and
IDS Financial Services Inc. for the IDS
Investors and IDS Stock Market Certificates,
filed electronically as Exhibit 1(c) to the
Post-Effective Amendment No. 5 to Registration
Statement No. 33-26844, is incorporated herein
by reference.
(c) Marketing Agreement dated October 10, 1991,
between Registrant and American Express Bank
Ltd., filed electronically as Exhibit 1(d) to
Post-Effective Amendment No. 31 to Registration
Statement 2-55252, is incorporated herein by
reference.
(d) Amendment to the Selling Agent Agreement dated
December 12, 1994 between IDS Financial
Services Inc. and American Express Bank
International, filed electronically as Exhibit
1(d) to Post-Effective Amendment No. 13 to
Registration Statement No. 2-95577, is
incorporated herein by reference.
(e) Selling Agent Agreement dated December 12, 1994
between IDS Financial Services Inc. and Coutts
& Co. (USA) International filed electronically
as Exhibit 1(e) to Post-Effective Amendment No.
13 to Registration Statement No. 2-95577, is
incorporated herein by reference.
(f) Consulting Agreement dated December 12, 1994
between IDS Financial Services Inc. and Coutts
& Co. (USA) filed electronically as Exhibit
1(f) to Post-Effective Amendment No. 13 to
Registration Statement No. 2-95577, is
incorporated herein by reference.<PAGE>
PAGE 192
PART II. INFORMATION NOT REQUIRED IN PROSPECTUS
Item 16. (a) Continued
2. Not Applicable.
3. (a) Certificate of Incorporation, dated December
31, 1977, filed electronically as Exhibit 3(a)
to Post-Effective Amendment No. 2 to
Registration Statement No. 2-95577, is
incorporated herein by reference.
(b) Certificate of Amendment, dated February 9,
1984, filed electronically as Exhibit 3(b) to
Post-Effective Amendment No. 2 to Registration
Statement No. 2-95577, is incorporated herein
by reference.
(c) By-Laws, dated December 31, 1977, filed
electronically as Exhibit 3(c) to Post-
Effective Amendment No. 2 to Registration
Statement No. 2-95577, is incorporated herein
by reference.
4. Not Applicable.
5. Not applicable.
6 through 9. -- None.
10. (a) Investment Advisory and Services Agreement
between Registrant and IDS/American Express
Inc., dated January 12, 1984, filed
electronically as Exhibit 10(a) to Post-
Effective Amendment No. 2 to Registration
Statement No. 2-95577, is incorporated herein
by reference.
(b) Depository and Custodial Agreement, between IDS
Certificate Company and IDS Trust Company dated
September 30, 1985, filed electronically as
Exhibit 10(b) to Post-Effective Amendment No. 2
to Registration Statement No. 2-95577, is
incorporated herein by reference.
(c) Loan Agreement between Registrant and Investors
Syndicate Development Corporation, dated
October 13, 1970, filed electronically as
Exhibit 10(c) to Post-Effective Amendment No. 2
to Registration Statement No. 2-95577, is
incorporated herein by reference.
(d) Agreement for the servicing of Residential
Mortgage Loans between ISA and Advance Mortgage
Company, Ltd., dated August 31, 1980, filed
electronically as Exhibit 10(d) to Post-
Effective Amendment No. 2 to Registration
Statement No. 2-95577, is incorporated herein
by reference.<PAGE>
PAGE 193
PART II. INFORMATION NOT REQUIRED IN PROSPECTUS
Item 16. (a) Continued
(e) Agreement for the servicing of Commercial
Mortgage Loans, between ISA and FBS Mortgage
Corporation, dated October 1, 1980, filed
electronically as Exhibit 10(e) to Post-
Effective Amendment No. 2 to Registration
Statement No. 2-95577, is incorporated herein
by reference.
(f) Agreement by and between Registrant and
Investors Diversified Services, Inc. (now IDS
Financial Services Inc.) providing for the
purchase by IDS of a block of portfolio
securities from Registrant, filed as Exhibit -
10.5 to the September 30, 1981 quarterly report
on Form 10-Q of Allegheny Corporation, is
incorporated herein by reference.
(g) Transfer Agent Agreements for the servicing of
the American Express Savings Certificate filed
electronically as Exhibit 10(g) to Pre-
Effective Amendment No. 1 to Registration
Statement No. 33-25385, are incorporated herein
by reference.
(h) Foreign Deposit Agreement dated November 21,
1990, between Registrant and IDS Bank & Trust,
filed electronically as Exhibit 10(h) to Post-
Effective Amendment No. 5 to Registration
Statement No. 33-26844, is incorporated herein
by reference.
11 through 24. -- None.
25. (a) Officers' Power of Attorney, dated May 17,
1994 is filed electronically as Exhibit
25(a) to Post-Effective Amendment No. 13
to Registration Statement No. 2-95577, is
incorporated herein by reference.
(b) Directors' Power of Attorney, dated May
13, 1994 is filed electronically as
Exhibit 25(b) to Post-Effective Amendment
No. 13 to Registration Statement No. 2-
95577, is incorporated herein by
reference.
26 through 28. None.
(b) The financial statement schedules for IDS
Certificate Company filed electronically as Exhibit
16(b) in Post-Effective Amendment No. 37 to
Registration Statement No. 2-55252 for Series D-1
Investment Certificate, are incorporated by
reference herewith.
<PAGE>
PAGE 194
Item 17. Undertakings.
Without limiting or restricting any liability on the part
of the other, American Express Financial Advisors Inc.,
(formerly IDS Financial Services Inc.) as underwriter,
will assume any actionable civil liability which may
arise under the Federal Securities Act of 1933, the
Federal Securities Exchange Act of 1934 or the Federal
Investment Company Act of 1940, in addition to any such
liability arising at law or in equity, out of any untrue
statement of a material fact made by its agents in the
due course of their business in selling or offering for
sale, or soliciting applications for, securities issued
by the Company or any omission on the part of its agents
to state a material fact necessary in order to make the
statements so made, in the light of the circumstances in
which they were made, not misleading (no such untrue
statements or omissions, however, being admitted or
contemplated), but such liability shall be subject to the
conditions and limitations described in said Acts.
American Express Financial Advisors Inc. will also assume
any liability of the Company for any amount or amounts
which the Company legally may be compelled to pay to any
purchaser under said Acts because of any untrue
statements of a material fact, or any omission to state a
material fact, on the part of the agents of American
Express Financial Advisors Inc. to the extent of any
actual loss to, or expense of, the Company in connection
therewith. The By-Laws of the Registrant contain a
provision relating to Indemnification of Officers and
Directors as permitted by applicable law.
<PAGE>
PAGE 195
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant has duly caused this amendment to this registration
statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Minneapolis and State of Minnesota,
on the 29th day of January 1996.
IDS CERTIFICATE COMPANY
By /s/ Stuart A. Sedlacek*
Stuart A. Sedlacek, President
Pursuant to the requirements of the Securities Act of 1933, this
amendment has been signed below by the following persons in their
capacities on January 29, 1996.
<TABLE><CAPTION>
Signature Capacity
<S> <C>
/s/ Stuart A. Sedlacek* ** President and Director
Stuart A. Sedlacek
/s/ Morris Goodwin* Treasurer and Principal
Morris Goodwin Financial Officer
/s/ Jay C. Hatlestad* Controller and
Jay C. Hatlestad Principal Accounting Officer
/s/ David R. Hubers** Director
David R. Hubers
/s/ Charles W. Johnson** Director
Charles W. Johnson
/s/ Edward Landes** Director
Edward Landes
/s/ John V. Luck** Director
John V. Luck
Signatures continued on next page.
<PAGE>
PAGE 196
Signatures continued from previous page.
Signature Capacity
/s/ James A. Mitchell** Director
James A. Mitchell
/s/ Harrison Randolph** Director
Harrison Randolph
/s/ Gordon H. Ritz** Director
Gordon H. Ritz
</TABLE>
*Signed pursuant to Officers' Power of Attorney dated May 17, 1994
filed electronically as Exhibit 25(a) to Post-Effective Amendment
No. 13 to Registration Statement No. 2-95577, is incorporated
herein by reference.
______________________.
Bruce A. Kohn
**Signed pursuant to Directors' Power of Attorney dated May 13,
1994 filed electronically as Exhibit 25(b) to Post-Effective
Amendment No. 13 to Registration Statement No. 2-95577, is
incorporated herein by reference.
_________________________.
Bruce A. Kohn
<PAGE>
PAGE 197
CONTENTS OF THIS POST-EFFECTIVE AMENDMENT NO. 16 TO REGISTRATION
STATEMENT NO. 2-95577
Cover Page
Explanatory Note
Cross-reference sheet
Prospectus
Part II Information
Signatures
